Last year we rolled out an update to SmartSurvey to add the functionality to quickly create surveys using the Net Promoter Score survey question. We thought it might be a good time to revisit the benefits of NPS as there is a consensus of opinion that it is a leading indicator of growth, making it a valuable asset to your company!
By calculating your customer’s NPS® score, you can learn what they think, how willing they are to recommend your services to others and to generally get a better understanding of their satisfaction rates. Read on to learn how to use Net Promoter Score effectively…
How does Net Promoter Score work?
Net Promoter Score® (NPS®) is an easy to understand management tool used to gauge consumer loyalty and determine how happy customers are. It is based on the performance metric that all customers can be categorised into three groups:
- Promoters – (score 9-10) – loyal enthusiasts
- Passives – (score 7-8) – satisfied customers
- Detractors – (score 0-6) – unhappy customers
To calculate your customer’s score you simply ask the question;
“How likely is it that you would recommend this company/product/service/brand/to a friend or colleague?”
Your respondent will rate their answer on a scale of 1 (not likely at all) to 10 (extremely likely).
Based on their answers, you can calculate an overall Net Promoter Score and identify customers who can be grouped as either ‘Promoters’, ‘Detractors’ or ‘Passives’.
To work out the NPS simply subtract the percentage of Detractors from the percentage of Promoters. The lower the number indicates a higher level of Detractors and the higher the number shows a greater number of Promoters. The highest possible Net Promoter Score is 100, the lowest possible is -100, and zero is in the middle.
If you have large amounts of survey data you can calculate your Net Promoter Score in Microsoft Excel in a single calculation:
Simply replace [Data] with the location of the NPS answer data range in your response spreadsheet.
But don’t worry if this all seems a little tricky, we do the work for you. If you use the pre-set Net Promoter Score survey question when creating your questionnaire in SmartSurvey, then we will do the calculation.
What do Net Promoter Scores mean?
Depending on the response, the people that completed the survey will be assigned a score. These are rated as follows:
Promoters: Score 9-10
This is the group of respondents that love your business/brand/services/products and are happy to spread the word. Promoters are your most loyal supporters who will continue to be enthusiastic about your organisation. They will continue to buy and refer positively to others. Referrals from promoters can fuel viral growth that will result in new customer acquisitions.
Passives: Score 7-8
Generally, these are satisfied customers that are not particularly enthused by your business. This group is representative of those users that are indifferent and can, therefore, be swayed to use other providers. Respondents who have a score of 7 or 8 are clearly happy with your offering but are certainly not your main advocates. Experience demonstrates that this group is vulnerable to relevant offers and could defect to your competition.
Detractors: Score 0-6
These respondents are not happy with your business/product/service/brand. They are more likely to spread negative messages about your business, either first hand or on social media. Detractors can have a negative impact on your brand through word of mouth. Any respondent that rates your organisation between 0 and 6 can be identified and contacted to resolve any issues they have before it progresses. Astute brand management organisations continually work to correct any negativity, reducing the number of Detractors.
How to Interpret Net Promoter Score
Whatever your score, whether positive or negative, it has to be taken in context and measured against the company performance over a set time period and benchmarked against other businesses within your sector. If you don’t have access to other industry benchmarks you can often find information online. The results, when analysed, can lead to strategic decisions on how to create growth and are a useful indicator of how many of your customers are at risk of churn.
Why should I use Net Promoter Score?
Many businesses, which actively gather feedback, believe a Net Promoter Score is a key metric needed to grow both revenue and profits. The theory leads to the conclusion that the more loyal customers you have, the higher your revenue will be. Many businesses show a positive correlation between profit and the number of ‘Promoters’ they have.
Net Promoter Score is a simple metric that is clear and easy to understand. By seeking feedback, you can identify issues that can then be addressed with the aim to reducing the number of ‘Detractors’ and creating more ‘Promoters’. Although the results may not give complex feedback and deep insight, it does, however, provides everything necessary to become a truly customer facing organisation that cares about its external market.
Whether you work in the private or public sector, Net Promoter Score can provide great insight for your business, helping you understand the challenges you face.
Using Net Promoter Score Survey
Adding Net Promoter Score to your surveys is quick and simple. It appears as one of the standard question types in the drop-down when creating a new question for your survey. A couple of clicks is all it takes, and you’re done.
If you would like more information about a Net Promoter Score survey, please contact our support team to book a live demo today.
NPS®, Net Promoter® & Net Promoter® Score are registered trademarks of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.