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Net Promoter Score
Unlock customer loyalty and growth potential with Net Promoter Score (NPS).
What Is Net Promoter Score (NPS)?
Net Promoter Score (NPS) is a widely used metric and system for measuring customer loyalty and gauging overall customer satisfaction with a company’s products or services.
It provides organizations with valuable insights into how their customers perceive their brand and whether they are likely to recommend it to others.
Key aspects of Net Promoter Score (NPS)
Respondents are categorized into three groups based on their scores: Promoters (score 9-10), Passives (score 7-8), and Detractors (score 0-6). These categories help organizations understand the distribution of customer sentiment.
NPS places particular emphasis on Promoters those who give high scores (9-10). These customers are seen as the most loyal and likely to refer others to the brand.
A positive NPS (greater than zero) is generally associated with business growth, as it suggests a net positive sentiment among customers.
Why Net Promoter Score (NPS) is so important?
NPS is a reliable metric for measuring customer loyalty. It helps organizations assess the degree to which their customers are satisfied, engaged, and willing to remain loyal to the brand.
A high NPS is often associated with business growth. Satisfied and loyal customers are more likely to make repeat purchases, spend more, and refer others to the brand. NPS provides a clear link between customer sentiment and business success.
Why Net Promoter Score (NPS) is so important?
How to calculate Net Promoter Score (NPS)?
Here are the steps to calculate NPS:
Step 1: Survey Your Customers
Send out a survey or questionnaire to your customers, asking them the NPS question: “On a scale of 0 to 10, how likely are you to recommend our product/service/company to a friend or colleague?”
Step 2: Categorize Respondents
Based on their responses to the NPS question, categorize respondents into three groups:
Promoters: These are customers who respond with a score of 9 or 10. They are highly satisfied and loyal to your brand. Promoters are likely to recommend your products or services enthusiastically.
Passives: Respondents who give a score of 7 or 8 fall into the Passive category. They are satisfied but not as enthusiastic as Promoters. Passives are somewhat loyal but may not actively recommend your brand.
Detractors: Customers who rate your brand with a score of 0 to 6 are Detractors. They are dissatisfied and unlikely to recommend your brand. Detractors can be critical of your products or services.
Step 3: Calculate Percentages
Calculate the percentage of respondents in each category:
Percentage of Promoters (P) = (Number of Promoters / Total Number of Respondents) x 100
Percentage of Passives (Pa) = (Number of Passives / Total Number of Respondents) x 100
Percentage of Detractors (D) = (Number of Detractors / Total Number of Respondents) x 100
Step 4: Calculate NPS
Subtract the percentage of Detractors from the percentage of Promoters to calculate your Net Promoter Score:
NPS = P – D
The resulting NPS can range from -100 to +100. A positive NPS indicates that you have more Promoters than Detractors, while a negative NPS suggests the opposite.
Interpretation:
An NPS of +50 or higher is considered excellent.
An NPS between +30 and +49 is good.
An NPS between 0 and +29 is considered room for improvement.
A negative NPS indicates that you have more Detractors than Promoters and may need significant improvements.
Example Calculation:
Suppose you received responses from 200 customers, and the distribution of scores is as follows:
Promoters (Scores 9-10): 100 customers
Passives (Score 7-8): 50 customers
Detractors (Scores 0-6): 50 customers
Calculate NPS as follows:
Percentage of Promoters (P) = (100 / 200) x 100 = 50%
Percentage of Passives (Pa) = (50 / 200) x 100 = 25%
Percentage of Detractors (D) = (50 / 200) x 100 = 25%
NPS = P – D = 50% – 25% = 25
In this example, the NPS is 25, indicating that you have more Promoters than Detractors, but there is still room for improvement in customer satisfaction and loyalty.
What Is the Difference Between Net promoter score (NPS) vs Customer satisfaction?
| Net Promoter Score | Customer Satisfaction |
|---|---|
| NPS is typically measured using a single-question survey that asks customers how likely they are to recommend a product, service, or company to others on a scale of 0 to 10. NPS categorizes respondents into Promoters, Passives, and Detractors based on their scores. | Customer satisfaction is usually measured using a broader set of questions or statements that ask customers to rate their overall satisfaction with a product, service, or experience. CSAT surveys often use Likert scales or numerical ratings. |
| NPS specifically focuses on customer loyalty and advocacy. It identifies Promoters (loyal customers likely to recommend) and Detractors (unhappy customers unlikely to recommend). | CSAT measures overall satisfaction with a specific interaction or experience but doesn’t directly assess loyalty or the likelihood of recommendation. |
| NPS scores can range from -100 to +100. A positive NPS indicates a net positive sentiment, while a negative NPS suggests a net negative sentiment. | CSAT scores are typically on a scale, often from 1 to 5 or 1 to 10, with higher scores indicating greater satisfaction. |
How Is Net Promoter Score (NPS) Used?
NPS is primarily used to measure customer loyalty and advocacy. By categorizing respondents into Promoters (loyal customers), Passives (satisfied but not highly enthusiastic), and Detractors (unhappy customers), organizations can quickly identify the proportion of customers who are likely to recommend their products or services to others.
NPS fosters a customer-centric approach to business. It encourages organizations to prioritize customer needs and preferences in decision-making, leading to more customer-centric strategies.
Ready to Improve Your Net Promoter Score?
Enhancing your Net Promoter Score (NPS) is a critical step toward building stronger customer loyalty and driving business growth. KEBS (PSA) software, can play a pivotal role in helping you achieve this goal.
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