Word of mouth is incredibly effective.
In fact, 74% of consumers say word of mouth is a key factor when making purchasing decisions. This is even more true for Gen Z and millennials. 63% say they trust what influencers say about brands more than what brands say about themselves in their ads.
Given how common it is to research online before trying a new product or service, your business may be a tweet away from attracting or driving future customers. The same goes for recommendations (or warnings) from friends, family, and coworkers.
Keeping a pulse on how your customers are feeling and how loyal they are to your brand is key to keeping the lights on for your business on. However, how exactly do you measure this?
This is where the Net Promoter Score, also called the NPS score, can help.
What is the NPS score?
The NPS score is one of the top customer service metrics businesses should monitor if they want to measure customer satisfaction. An NPS score calculation lets you know how likely your customers are to recommend your business to others they interact with.
It was originally developed by Fred Reichheld, a business strategist who researches and writes about loyalty.
Reichheld spent nearly two years researching survey questions that would correlate customer behavior, such as driving and purchasing products, with business growth. He was surprised to discover that the most influential question was not directly related to customer satisfaction or loyalty. Instead, it was about how likely someone was to recommend a product, service, or company to their friends, family, and coworkers.
Having someone give strong advice means they are risking their own reputation. This can be a good indicator of both customer satisfaction and loyalty. Earning this customer loyalty is vital for most businesses to grow their businesses effectively. To be successful, businesses often need repeat customers and referrals based on what they offer.
Why is the NPS score important and how is it used?
The biggest benefit of NPS is, increase customer retention. This is important because retaining customers is much cheaper than constantly gaining new ones.
NPS makes it clear who your supporters are. This means you have the opportunity to reward them for their loyalty and improve your relationship with them.
Rewards can come in the form of perks, referral codes and much more. Just reaching out to them and accepting their loyalty will earn you brownie points, too.
On the other hand, it gives you a chance to quickly connect with your detractors and reach out to them before their opinions about your brand get tough.
Regardless of how you score, regular NPS surveys should reveal the exact interactions that make up your supporters and detractors. With this level of originality, you can quickly identify areas where you need to invest to retain your customer base (and hopefully turn some scammers into supporters).
How can you calculate your Net Supporter Score?
Marketers can calculate their net supporter score by asking a single question: On a scale of 0 to 10, how likely are you to recommend our company/product/service to a friend or colleague?
The NPS survey really is that simple.
Source: MailChimp
After asking the NPS question, you can group the respondents into three different categories:
Supporters (9 to 10 points): Promoters play an important role in your business. They are loyal customers who tell about your products and services to those around them. They can essentially act as an extension of your marketing department.
Passives (7-8 points): Passives are satisfied customers, but they don’t exactly sing your praises. They may eventually become Promoters or be influenced by competition.
Deniers (0 to 6 points): Badgers are dissatisfied with your company and are less likely to become repeat customers. Worse, they can lower your brand’s reputation by passing on their negative experiences to others.
To find your net score of supporters, subtract the percentage of supporters (your loyal customers) from the percentage of scammers (unhappy customers). Passives are not included in the formula. Your final score will drop somewhere between -100 and 100.
You can also add more questions to your survey. Some common ones are:
- How did you hear about our company?
- Did you find what you were looking for today?
- How easy was it to find?
- How was your overall experience with our company?
Avoid overloading your customers with questions, though. The beauty of the NPS survey is that its brevity results in a higher response rate than traditional surveys.
In addition to your NPS score, you can add user engagement metrics such as time on page, average session length, and bounce rate to your analysis. That way, you’ll know more about your customers’ journeys without overwhelming them with survey questions.
When should you do the NPS survey?
The simplicity of the NPS formula is what made it the game changer in the marketing world.
Instead of asking customers to fill out long, generic surveys about your company, NPS can potentially get their opinion on each step of the journey.
So how does this work in practice?
When it comes to NPS, timing is everything. You want to make sure you reach out to customers after every major activity they do.
However, if there are many steps in the customer journey, Harvard Business Review recommends randomly presenting the survey to customers to ward off survey fatigue.
This way, you map out the entire user experience by emphasizing the good and capturing both the good and bad aspects of the journey. ‘Wow!’ You may be creating. they understand for your customers and they don’t even realize it.
Technology is making it easier than ever to catch customers at the right time. Some of the most popular channels for NPS surveys include:
- Instant messaging (Facebook Messenger)
- text
- in-app
- chatbots
You’ll probably want to use more than one of these channels to get feedback. There are many templated answers online to help you get started.
What is a good NPS score?
NPS scores drop somewhere between -100 and 100. The higher the score, the better, and vice versa.
Bain & Company, which owns the trademark for the NPS system, defines any score above 0 as a step in the right direction. Not being in negative integer territory indicates at least some degree of customer loyalty.
Of course, you probably won’t be satisfied with a single-digit score. Any score above 20 is considered “positive,” a score of 50 is “excellent,” and 80 or above is considered “world class,” according to the firm.
However, deciphering the meaning of your NPS can be difficult.
First, as with any type of survey, you want to make sure you have a large enough sample size. Every industry is different, so there is no clear answer as to how many answers are enough. What is known is that more is definitely better, and this is especially true if you have a limited customer base. After surveying only a dozen or so customers, you should definitely be skeptical of a high score.
It’s also common for people to be surprised at how low their company’s ratings are. A low score is not always an immediate cause for alarm and may have more to do with the business environment in which you operate.
For example, the location of your consumers will affect your NPS result. Research shows that respondents in Europe tend to be more conservative in their ratings. On the other hand, in the United States, customers distribute high grades more freely, even if they are not enthusiastic supporters in real life.
It is also important to consider industry norms. Some industries that have difficult relationships with customers, especially collection agents, tend to score low on the NPS scale.
Benchmark data can help you understand where you stand compared to your competitors.
Some of the insights you can get from comparative data are threats and opportunities for your business and seeing if a competitor has recently made a change that increases their NPS. You may discover if it is worth repeating this process.
Such data can be purchased from a third-party market research firm to find out what the comparative NPS score is for your industry and location.
Setting your NPS score is still a useful exercise if you operate in an emerging industry where NPS scores for competitors are not yet available. In this scenario, you use your past performance as your benchmark.
It is important to note that any improvement in score is an indicator of future growth. Of course, the opposite is also true.
Free NPS calculators
If you’re not ready to invest in professional NPS tools yet, there are free options you can explore. Our free Customer Service Performance Report template includes an NPS calculator as well as calculators to help you measure other business metrics such as:
- loss of customers,
- customer acquisition costs,
- Customer lifetime value
- Net Promoter Score,
- And more.
Best of all, it’s completely free.
Easily manage all your social media profiles using Moyens I/O. You can schedule and publish posts, engage with your followers, track relevant conversations, measure results, manage your ads, and much more, all from a single dashboard.
