What exactly is Net Promoter Score?

NPS is a metric generally used by marketing and customer experience teams to measure the overall experience of your customers.

What exactly is Net Promoter Score?

As a business, the ultimate point of growth you should optimize for is customer loyalty. As you work your way through the growth funnel from Awareness to retention, you want to make sure that your customers are not just only retained but loyal enough to refer your business, product, or service to their family and friends.

This article is focused on the Net Promoter Score (NPS) - a metric used by marketers to measure the loyalty of customers to a business. By the time you finish reading this post, you would have more in-depth knowledge about:

- What Net Promoter Score (NPS) is.
- How to calculate NPS and,
- How it influences and benefits your business.

Let’s dive right in!

What is the Net Promoter Score (NPS)?

NPS is a metric generally used by marketing and customer experience teams to measure the overall experience of your customers. Since it is known that only a customer with great experience is most likely to return and refer your business to their family and friends, NPS is that metric that determines if a customer is a referrer or not. You may ask, so how is this score determined?

NPS can be determined by asking your customer this simple question via a survey after each touchpoint with your business :

‘How likely are you to refer us to your friends or colleagues’

Net Promoter score ratings

Respondents give their ratings from 0 (not at all likely) to 10 (extremely likely) and depending on their response they fall into any of the 3 categories:

Promoters: these are respondents that give a score between 9 and 10. They are typically loyal and satisfied customers that are most likely to refer your business to their family and friends.

Passives: they give a score between 7 and 8. They are happy with your service but are not satisfied enough to refer you.

Detractors: respond with a score of 0 to 6. These are unhappy customers who are unlikely to buy from you again, and may even discourage others from buying from you.

Having known what a Net Promoter score is and how to group respondents based on their ratings, we will now see how to calculate the final Net Promoter score for your business.

How to calculate Net Promoter Score.

The final Net Promoter Score is calculated by getting the percentage of the detractors and subtracting it from the percentage of the promoters.

That is,

NPS = Percentage of Promoters - Percentage of detractors.

For instance, say 80% of your survey respondents are promoters and 5% are detractors, then your NPS rating = 80 - 5 = 75.

We can see that at the core of NPS is customer feedback. To get NPS from your customers, the first thing you need to do is create a survey, and this survey is an opportunity for you to get more feedback about your company’s service from your customers.

So, an NPS survey should be short, simple, and contain straightforward questions.

For example,

- How likely are you to recommend our business to your friends, family, or colleagues: this is usually in the form of a scale from 0 to 10 as explained in the section above.
- What is the reason for your score?: here is an opportunity to understand the reason behind their rating and know how to improve it.
- How can we make your experience better?: Here, you’re giving them the chance to help you improve your customer service.

Now that you’ve known the importance of your NPS and how to get it from your customer, you might ask, how does tracking NPS scores influence or benefit your business?

How does tracking NPS scores benefit your business?

NPS is an important metric for collecting customers' feedback, but beyond this, it can help you measure how you are doing compared to your competitors. By knowing the percentage of your customers that are likely to become loyal to your business, it would help you strategize your marketing and see how to segment these different customer groups and retarget each with the right kind of messaging.

For instance, customers in the detractors category don’t want to refer your business to anyone because they are either displeased or dissatisfied with a particular service, so targeting such customers with messaging to promote or refer your business to others would end in futility. You can also find out from different customers responses what areas they are having issues with or where the experience is lapsing and improve on that.

What is a good Net Promoter Score?

Net Promoter scores are relative to each industry. There are specific benchmarks for each industry, and it’s best to find out the score for your industry and benchmark yours with that.

According to a survey by retently, the NPS Benchmark for the B2B SaaS and Software industry is 30, while that of Digital Marketing industries is 52. Generally, your business NPS is a clear indicator of how you treat your customers and how happy they are.

So, if you get a NPS of 0, you know your customers are unhappy with your service and are most likely not going to do business with you again. While a score of 70 and above seems like it's too much for your business, it is actually attainable if you put in more customer-centric approaches to your processes to improve your customers experience. And the best way to achieve this is to get feedback from your customers on how they want to be serviced and how you can serve them better.

This is where Spirē comes in.

Spire Africa

Spirē is a feedback collection and management platform that helps you get feedback, questions, complaints, recommendations or suggestions from your customers and stores them in a central place for you to easily access and analyze them. This way, all you’ll have to do is identify what touchpoints to improve and the best channels to reach your customers.

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