Net promoter score (NPS score) is often used as a key performance indicator that gauges customer loyalty and brand reputation. It’s considered to be a superior measurement over customer satisfaction research and can be tied to revenue growth.
How NPS Score Works
NPS score is used to measure how likely customers are to recommend a business’s products or services to others. The measurement goes beyond word-of-mouth marketing to gauge a customer’s experience, how they interact with products and how they truly feel about the brand overall.
NPS scores are both quantitative and qualitative. A numerical score is assigned (quantitative), but it’s based on customer feedback (qualitative).
The higher the NPS score is the better it is for your business. The score ranges from -100 to +100 with 0 being the neutral point. Anything higher than 0 is considered positive. An NPS score of 50 or higher is excellent.
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Why Businesses Use NPS Score
You probably already know consumers trust what their friends, family and coworkers recommend far more than any type of advertising they come across. No matter how much you spend on a marketing campaign and getting the messaging just right if a lot of customers are unsatisfied and telling people about it that will have a negative impact on conversion, retention and revenue.
NPS score is a valuable metric in terms of getting customers to sing your praises. It can help you:
- Get a feel for your brand reputation online
- Measure customer experience
- Understand a customer’s perception of the brand overall
- Gauge potential business growth
- Determine customer loyalty
- Weigh how satisfied customers are with products/services
- Figure out what can be done to improve retention and loyalty
- Measure the perceived value of products/services
- Target detractors for engagement
- Find out why customers are unsatisfied
- Intervene before customers leave negative reviews
- Cut churn rate
- Improve referral rates
Today, brand reputation matters more than ever. Customers are comparison shopping everything and reviews are easy to find. Even when the market is down or a new competitor enters the field, a great reputation can be enough to help a business survive and thrive.
Building a solid reputation takes knowing who your promoters are and nurturing those relationships while simultaneously improving the experience for detractors.
You may find key similarities between the customers with the highest NPS scores. It can reveal what actions, product features, etc. make customers more likely to promote your brand so that you can take action to improve the score of other customers. You’ll find out why detractors have a negative impression and can take steps to correct issues.
The insight that’s gained from calculating NPS scores can also tell you how effective your efforts have been to build reputation and trust into a product or service. You may even find certain solutions for improving trust.
At the end of the day, the goal is to turn as many customers into promoters as possible. These are the customers that you can count on to make repeat purchases and referrals. It’s these customers that have the highest lifetime value (LTV), and their referrals also have a 16% higher lifetime value than other customers.
Using NPS to Score Employee Satisfaction
NPS score can be applied in more ways than one. Businesses can use the same methodology to get an idea of how satisfied and engaged employees are. You may even identify which employees are improving customer satisfaction and who is dragging it down.
How to Calculate Your NPS Score
Many businesses make the mistake of thinking revenue is an indicator of customer satisfaction. In some situations, it can be, but NPS score is the superior measurement. The one true way to accurately calculate a brand’s NPS score is through a survey. Ask customers this question:
“How likely is it that you would recommend [brand] to a friend or colleague on a scale from 1 to 10, 10 being most likely?”
Respondents will fall into one of three categories:
Promoters – Customers that are highly satisfied and recommend products/services to others. Their response is a 9 or 10.
Passives – Customers that are satisfied but not enthusiastic enough to promote the brand. Their response is a 7 or 8.
Detractors – Customers who are unsatisfied and will negatively review the company. Their response is a 0-6.
The NPS score is calculated by subtracting the percentage detractors from the percentage promoters. (Passive responses are ignored for this calculation.)
Detractors – Promoters = Net Promoter Score
You can gain even more value from an NPS survey by asking follow-up questions such as:
“What is the key reason you would/wouldn’t recommend [brand]?
This gives you the “why” that can inform everything from product development to wait times for customer service calls. You can use that information to fix problems that are plaguing detractors and get more customers to the promoter status – or at the very least into the passive category.
Mixpanel gives other website owners and app developers the ability to calculate their own NPS score with SurveyMonkey integration. A customer’s survey responses can be included in their Mixpanel user profile along with other user engagement metrics that give you a complete customer satisfaction picture.
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