How to Get the Most Out of Net Promoter Score (NPS)

Your vision is to know whether your customers are happy with your product or service, and if or how many love it enough to recommend it to their family, friends, and coworkers.

So how would you get started in figuring out how likely your customers are to recommend you? One method is the Net Promoter Score or NPS developed in 2003 by Bain and Company. As you can see in the image, the response ranges from 0 to 10, ten, or extremely likely, being the best rating you can achieve. Let's go through what NPS is, how to calculate it, what the score means, who can use it, the limitations, and how to turn those around.

What is NPS for?

This method can be used for gauging happiness or level of satisfaction in almost anything, but it’s most commonly used in evaluating the customer experience. If you are using this method, you will have insights into where you are compared to competitors and your own internal benchmark for how you are doing in customer experience year over year or quarter over quarter.

How do you calculate NPS?

Step 1:

To find your NPS, step one is to ask the question “How likely is it that you would recommend [insert brand] to a friend or colleague?” Looking at the chart, it’s divided into three main categories.

Promoters: These are the 9 and 10 responses and are the customers who are likely to be continued customers, and will refer you to others, assisting in the growth of your business.
Passives: These are the customers who respond 7 or 8 and are less likely the promoters to recommend you. They are relatively happy customers, but it’s possible if a competitor came along with a better deal or something else to entice them, they would go elsewhere.
Detractors: These are the customers who are not happy and can actually hurt your brand by leaving negative reviews and when the topic of your brand comes up, they likely have something negative to say about it.

Step 2:

To calculate NPS, subtract the percentage of detractors from the percentage of promoters and you have your NPS.

Example NPS

Let’s say you are a project management software business. You ask the NPS question on your site and over the course of a couple of weeks, you have your results. You find that 7% of responses are Detractors, in the 0 to 6 range, 53% are Passives in the 7 to 8 range, and 40% are Promoters in the 9 and 10 range.

NPS = Promoters - Detractors = 40 - 7 = 33

What does the score mean?

Our case study has a 33, so now what? According to Bain and Co., if you’re above 0, that’s good because more people are recommending you than not. However, you hope to be higher. They consider a favorable score to be above 20, an excellent score is 50 or above, and 80 is considered world-class. Initially, 33 seemed low since the total % is 100, but remember this score isn’t like a typical grade school test. Our case company is doing alright with some room to improve.

Who can use NPS?

Any business or industry can implement an NPS. There is a lot of software out there available to assist with this like Qualtrics or Hotjar to make it easier. The most common way to perform NPS is by adding the survey to your site or emailing it. The drawback with emailing is traditional email open rates can be in the 20% range so you may bias your responses to just your most engaged customers so take that into consideration when determining your delivery method.

How often should you be reviewing this?

Since you probably make regular updates and upgrades to your service, or you have regular launches, it’s a good idea to review this figure quarterly or annually. Once you start doing this, you will have a benchmark to work with to determine the trend in customer satisfaction.

What are the limitations of NPS?

Limitation 1: You may argue that the passive customer concept doesn’t quite apply here.

For example, as Fisher and Kordupleski note, there are customers who will always shop around for something better or different and they just will not be loyal to your brand no matter how ‘happy’ they are.

Limitation 2: NPS itself doesn’t tell you what needs improvement.

So you have a score, but what is the next step to take action?

Limitation 3: NPS is focused on your current customers.

Again, now you have a score, so what do you do to gain more customers?

Limitation 4: NPS itself doesn’t give you information on competitors.

Again, now you have a score, but what are your customers seeing when a competitor markets to them, or what else are they offering?

Limitation 5: NPS is focused in general on the internal, and not external.

You need to know more about the external, or why a customer buys from you, what problems you are solving well and which you are not.

Limitation 6: You may have different products or services.

Customers may love some of your products and hate others.

Limitation 7: You aren't able to distinguish between the user types.

Would the decision-maker respond differently from the people who use the product or service regularly?

How can the limitations be improved?

1. You want to be clear in the question you ask about what you are asking their rank of if you have different divisions or products.

2. Make sure your pool of customers is as diverse as possible. You want to avoid just targeting happy customers who have been with you for a long time so that you remove as much bias as possible.

3. It's nearly impossible to avoid all bias, but just be aware when selecting customers to sample that you may have differing views whether they were the person who purchased the product vs. the person actually using the product.

4. As far as improving when you just have a score to work with and no other details, this is where the upgraded Net Promoter Score comes in, and you add questions to this to get more actionable insights with the Net Promoter System. The Net Promoter System asks additional follow-up questions in order to get further insights. You follow the exact same procedure with asking the question in step 1, but you add an additional one or two questions. These questions should be asked immediately following the rank question. Some examples of common follow-ups are below.

What is the primary reason for your score?
What could we do better?
What can/should we do to wow you?
What did we do well?

Think about the responses you may get with these simple questions and how much more insightful this exercise will be. Let’s take our case study from earlier, and we see our score is 33. If customers told us that we could shorten page load times, have a more responsive customer support team, and make the user interface easier on the eyes with color choice, we have several areas to focus on to improve the score that we would otherwise miss out on by stopping at the score alone.

In summary, the Net Promoter Score is a useful metric in customer experience that can be made more insightful by adding the follow-up questions. There are a lot of ways bias can creep in but being aware of it and noting assumptions will help greatly. As always, this is one tool in the toolbox and you always need your years of expertise and industry knowledge to play a role. You will end up with the benchmark score that you can regularly monitor, and actionable items that you can begin to prioritize in order to improve the experience. You should expect to find insights on all areas of the business by asking follow-up questions from marketing to product design to billing.

Written by Nicole Hullihen, October 17th, 2021

References to learn more about Net Promoter Score or NPS

https://www.qualtrics.com/experience-management/customer/net-promoter-score/

https://valuemetrics.com.au/wp-content/uploads/2020/08/Net-Promoter-Score-Fisher-Kordupleski.pdf

https://www.bain.com/insights/introducing-the-net-promoter-system-loyalty-insights/

https://www.hotjar.com/net-promoter-score/system/

https://www.customermonitor.com/blog/what-is-a-good-net-promoter-score

https://hbr.org/2019/10/where-net-promoter-score-goes-wrong

https://www.satrixsolutions.com/blog/10-examples-of-how-you-are-artificially-inflating-your-net-promoter-score/