NPS Step 1: The Basics of the Net Promoter Score for Customer Research
Learn how to calculate your Net Promoter Score. The Net Promoter Score is a customer research tool that tells you how likely is it that someone will recommend your company to their family, friends and colleagues. Use this info to increase your word-of-mouth advertising force, improve your customer experience, improve profitability and make needed improvements to your products or services.
For more resources on building your strategic plan, view the Essentials Guide to Strategic Planning.
“My name is Cammy Lore. What we’re going to do today is talk about a way to measure your customer experience that matters. It’s with the Net Promoter Score or NPS. What the Net Promoter Score is, it is one question, that’s the beauty of it. It’s how likely is it that someone will recommend your company to their family and friends. What’s important about that, is that they’re putting their reputation on the line, they’re sticking their neck our for your company and that’s extremely powerful.
The way that it goes is when you survey people with NPS typically, it’s an 11 point scale. If someone scores you high in the 9 or 10 area, they’re your promoters, [inaudible 00:00:43]. Word of mouth, extended marketing force, they’ll pay more for your products most likely, and they’ll also try your new products and services. They’re really an important group to please and stay happy.
The next are your passively satisfieds. They will score you in the middle about 7 to 8 and they’re ambivalent towards your services. They’re susceptible to your competitors offerings and they could be gone tomorrow. You won’t know about it because they won’t tell you.
The next are your detractors. Those are the lower area people that score you from zero to six. The important thing about detractors is that they will identify the things that you need to fix about your company. They’re really important that way. By identifying detractor trends, what you’re actually doing, if you listen to them, and operationalize it to fix it, you’ll move these people into being promoters for your company, they’ll stick with you longer, and they’ll actually make your company over the long run more profitable.
What is the symmetric? What is the NPS score? The NPS score is the simple equation. Let’s use this example. If you send out a survey and 115 people respond, 60 of them score you nine or ten, those are your promoters, 39 are passively satisfied and then 16 are your detractors.
This is the equation that we use. It’s the percent of promoters, which 16 over 115 is actually 52, minus the percent of your detractors. 16 over 115 is 14 percent. When you do the math, you’ll come up with an NPS of 38 percent. That’s the percentage of a customer base that are pure promoters. Those are the people that are going to do good by your company. You want this number to increase over time, and you want it to be your benchmark so you can understand if you’re improving your customer experience.
That’s it about NPS. What it is, it’s elementary, it’s fundamental, and it’s so simple and intuitive that it’s easy to understand throughout your entire organization. It’s a great way to communicate about improving the experience that your customer’s have with you.”