Have you ever liked a company so much that you’ve told your friends about it?
The Net Promoter Score system uses one basic question to measure customer loyalty:
“How likely is it that you would recommend our organisation to a friend or colleague?”
There are many formulae to understand customer’s opinions, such as the Customer Satisfaction Score (CSAT) system, but the NPS system is intended to go beyond testing how satisfied a customer is with a company: it’s designed to test whether someone likes a brand enough to recommend it to others.
In other words, the person isn’t merely “satisfied” with the company – by telling others about the brand, the person is effectively marketing the company’s services.
Although there are pros and cons to NPS, numerous research studies have shown that the NPS system also correlates with business growth.
Studies by the Harvard Business Review have found that companies ranging from banking to car-rental companies show higher income when they improve their Net Promoter Scores.
So, if you’re looking for a more scientific way than just relying on online reviews to understand your brand’s strength, the NPS is a straightforward system to use, and one of its big benefits is that it allows you to benchmark your company’s results against others in your industry.
The Way NPS formula works
Just as the main question of the Net Promoter Score sample survey is fairly simple, the Net Promoter Score calculation system is too. At first glance, it may seem rather complicated, but we’ll show you how to break it down and make figuring out your Net Promoter Score an easy process.
The Net Promoter Score Scale
To get started, customers are asked to rate their likelihood of recommending a company to a friend or colleague by using a 0-10 point scale:
The number on the scale that a customer chooses is then classified into one of the categories: “Detractors,” “Passives,” and “Promoters.”
0 – 6: Detractors
7 – 8: Passives
You can think of the NPS system as similar to a four-star system on an online review, but the NPS scale gives you a broader way (and a more accurate method) to measure customer’s opinions.
How to calculate Net Promoter Score ?
Let’s suppose you’ve sent out an online poll with the NPS question and the 0-10 scale and you’ve received 100 responses from customers. What do you do with the results? Is it as simple as averaging the responses? Well, not quite. But it’s almost that easy.
The NPS system gives you a percentage, based on the classification that respondents fall into – from Detractors to Promoters. So to calculate the percentage, follow these steps:
· – Enter all of the survey responses into an Excel spreadsheet.
· – Now break down the responses by Detractors, Passives and Promoters.
· – Add up the total responses from each group.
· – To get the percentage, take the group total and divide it by the total number of survey responses.
· – Now subtract the percentage total of Detractors from the percentage total of Promoters – this is your NPS score.
Let’s break it down:
(Number of Promoters – Number of Detractors) / (Number of Respondents) x 100
Example: If you received 100 responses to your survey:
10 responses were in the 0-6 range (Detractors)
20 responses were in the 7-8 range (Passives)
70 responses were in the 9-10 range (Promoters)
When you calculate the percentages for each group, you get 10%, 20% and 70% respectively.
To finish off, subtract 10% (Detractors) from 70% (Promoters), which equals 60%. Since an example Net Promoter Score is always shown as just an integer and not a percentage, your NPS is simply 60. (And yes, you can have a negative NPS, as your score can range from -100 to +100.)
Once You’ve finished your Net Promoter Score Calculation. Now what?
So you’ve sent out the NPS survey sample to your customers. You’ve compiled the results and run the numbers. You now have your Net Promoter Score number – maybe it’s a 52. Is that good or bad?
Well, like many things in life, it’s really all relative. If your competitors have NPS numbers in the high 60s, you’re probably going to try to work out where your brand could improve. On the other hand, if your competitors all have scores in the low 40s, you’re doing just fine.