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What is the Net Promoter Score?
Net promoter score (NPS) is a market research metric that takes the form of a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or service to a friend or colleague.
The Net Promoter Score methodology is based on asking customers the single question:
How likely are you to recommend this company/product/service to a friend or colleague?
Participants are asked to rate their responses on a scale from 0 to 10, with 0 indicating a complete lack of willingness to recommend the company, and 10 indicating a very high likelihood of becoming a brand advocate.
Identifying those who would or would not recommend your brand is critical in today’s competitive landscape, making the Net Promoter Score (NPS) one of the most vital brand health and customer experience metrics.
Why Track NPS?
Understanding Market Position
The Net Promoter Score helps businesses place their brands in the market according to how customers perceive them, through data on promoters and detractors. It makes it possible to benchmark your brand compared to your competitors and/or industry by providing a big-picture insight which you can then use to dive into the details.
Growth Forecast
NPS provides insights into the likelihood of repeat customers, which allows you to forecast the potential growth, revenue, and health of your brand.
It is Quantifiable
NPS makes it simple for a company to see how it is performing with a straightforward metric. The NPS introduces common terminologies that are easy to understand by everyone.
Adjust Strategies Over Time
NPS is an effective way to track change over time and make necessary adjustments. It’s a pointer to continue improving if the score is going up or to re-assess the actions you’re taking or do some investigating to figure out why when the score starts dipping to avoid a crisis.
Calculating and Interpreting the Net Promoter Score
To determine the Net Promoter Score, you will need to collate all the ratings (between 1 and 10) provided by your respondents. These ratings help you grade your respondents into their respective segments:
Detractors (0-6): These are customers who could be dissatisfied or do not like your products or brand. This is an important group to keep track of since they are least likely to purchase again, and their negative sentiments can turn into negative public reviews which can damage your reputation online.
Passives (7-8): The passives are, generally speaking, good customers, but they are not your best. This group isn’t unhappy with you, but they can easily shift allegiance and jump to your competitors if a better product option or price point comes along.
Promoters (9-10): Promoters are your best customers as they are either the heaviest users of your brand or just highly satisfied with your products or services. They are most likely to create value for the brand by either making more purchases, recommending your brand to others, or becoming a lifelong customer. This group is ideal for cross-selling, up-selling, referral, and loyalty programs.
Once you have the segments, you can now calculate the Net Promoter Score, which is, simply, the percentage of detractors subtracted from the percentage of promoters.
Example:
If you received 100 responses to your survey and 30 were in the 0–6 range (Detractors), 20 were in the 7–8 range (Passives) and 50 were in the 9–10 range (Promoters), you will subtract the detractors from the promotors and find the percentage:
(50-30)/100 x 100 = 20% (NPS is always reported as a whole number, so the NPS will be 20).
What does this mean? A Net Promoter Score over 0 would be considered ‘good’ as there are more Promoters than Detractors, but this should be considered as the minimum level of progress. A Net Promoter Score above 20 is favorable and above 50 is excellent – which should be the aim, as you turn your detractors into promoters.
Measure your Net Promoter Score with GeoPoll
Using GeoPoll’s real-time mobile surveying platform and panel of respondents throughout emerging markets, you can easily track your NPS on a regular basis and perform in-depth analyses of your promoter and detractor groups by demographic. Collect data daily, weekly, or monthly to quickly identify changes and take action to maintain a high Net Promoter Score. Contact us to learn more and tell us about your project.