What is the Net Promoter Score (NPS)?
Net Promoter Score (NPS) is a metric used to measure customer loyalty, satisfaction, and enthusiasm with a company that’s calculated by asking customers one question: “On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?” Aggregate NPS scores help companies improve service, customer support, delivery, etc., for increased customer loyalty.
How to calculate Net Promoter Score (NPS)?
NPS, one of the top customer satisfaction metrics, is calculated by subtracting the percentage of customers who answer the NPS question with a 6 or lower (known as ‘detractors’) from the percentage of customers who respond with a 9 or 10 (known as ‘promoters’).
NPS = % Promoters - % Detractors
Promoters (score of 9 and 10) represent a company’s most happy and loyal customers who act as brand ambassadors and increase referral flows.
Detractors (score of 0 to 6, included) are unlikely to recommend a company or product to others, probably won’t stick around or repeat purchases.
Passives (score of 7 or 8) are not actively recommending a brand but are also unlikely to damage it with negative word of mouth.
What is a good NPS score?
Any score above 0 reads as ‘good’ because it indicates that a business has more promoters than detractors. A perfect score of 100 indicates that every survey respondent would recommend a company to someone else—a score that nobody has ever achieved.
What is a bad NPS score?
Any score below 0 indicates that a business has more detractors than promoters. Even if the bar is set low, a negative NPS is a sign that a company needs to improve its situation by reducing unhappy customers and generating more promoters.
What factors impact a company’s Net Promoter Score?
Net Promoter Score (NPS) is a measure of customer loyalty and satisfaction. Various factors impact a company's NPS:
- Product Quality: If a product consistently meets or exceeds expectations, it's likely to result in a higher NPS.
- Customer Service: Effective, empathetic, and responsive support boosts customer loyalty.
- Pricing: Perceived value compared to the cost of the product or service can influence NPS.
- User Experience: A smooth, intuitive user experience with minimal friction can positively impact NPS.
- Company Reputation: Public perception and trustworthiness can affect how customers rate the company.
- Product Reliability: Products that function without issues lead to satisfied customers.
- Communication: Clear, timely, and honest communication with customers, especially during issues, can influence NPS.
- Onboarding Process: How easily new users can adapt and gain value from a product or service can affect their loyalty.
- Company Values: Alignment with social, environmental, or ethical values that resonate with customers can impact their loyalty.
- Competitive Landscape: The presence of better or worse alternatives in the market can influence a customer's recommendation likelihood.