How do we know if a customer likes our products or services? The answer to this is Net Promoter Score (NPS). Today, we will understand what good and bad NPS scores are. In addition, sharing tips on how to get a good NPS score is important because getting a high score isn’t easy. But we’ve got some best practices to help you with your research.
What is NPS?
NPS, short for Net Promoter Score, is a way to find out how happy customers are with a product or service. It does this with a simple two-question survey. The first question is: Would you suggest our brand/product/service to a friend or coworker? People can answer this question by picking a number between 0 and 10.
Businesses rely on NPS ratings to identify sectors requiring enhancements. However, it’s vital for these organizations to avoid making NPS survey participation feel forced. Additionally, NPS should not be the sole metric for customer loyalty.
ALSO READ: Why Should Businesses Send NPS Surveys?
How Do I Calculate NPS?
The computation of NPS (Net Promoter Score) is relatively straightforward, though you might want to keep a calculator handy. The steps involved are as follows:
- Determine the total count of the people who responded.
- Find out the total count of respondents who rated you 9 or 10, which we classify as Promoters.
- Know the total count of respondents who rated you from 0 to 6. These individuals are considered Detractors.
Before the final calculation, some queries may arise: What happens to the respondents who rate a 7 or 8?
While these are favorable ratings, these respondents are not strongly biased either positively or negatively. Thus, they are excluded from the final score.
Why are respondents who rated a 6 categorized as detractors? Isn’t 6 a decent score?
Consider it from the perspective of the person rating it a 6. If you gave a ‘6’ rating to someone else’s product/service, it’s likely that you think there are some issues with either the product or the service. If asked about it, you might be inclined to highlight the flaws over the advantages, which may have negative consequences.
Moreover, negative feedback, even a minor one, has a more profound influence than positive feedback. This effect is evident in our day-to-day interactions and online product reviews.
With the preliminary queries addressed, the final step is to subtract the percentage of detractors from the percentage of promoters.
Net Promoter Score = % Promoters – % Detractors
For instance, if the scores received were: 10, 9, 8, 7, 6, 5, 4, 3, 2, 1, only two out of ten respondents are promoters (20%), and six out of ten respondents are detractors (60%). This computation results in an NPS score of -40.
What is a Good NPS Score?
An NPS score operates on a -100 to +100 scale, with a score greater than 0 considered satisfactory since it suggests that a business possesses more advocates than critics. High-performing organizations typically boast an NPS of 70 or more. However, this isn’t reserved for large, multinational corporations. For instance, in 2018, the NPS of Netflix was 64, PayPal scored 63, Amazon 54, Google 53, and Apple 49.
An elusive score of 100 means that every respondent would advocate for the company—this ultimate goal has never been accomplished.
What is a Bad NPS Score?
An NPS score less than 0 signifies that the business has more critics than advocates. Here, industry NPS benchmarks come into play: an NPS score of -3 could appear low on its own. But it becomes less when compared to key industry competitors; if the industry average was -10, then -3 wouldn’t seem quite so concerning.
Nevertheless, a negative NPS signifies that a business needs to take significant measures to enhance its situation, minimize dissatisfied customers, and increase its advocates.
Best Practices for a Good NPS Score
Luckily, there are various methods you can adopt to improve your NPS score in the future. Here are a few factors to bear in mind:
Educating Your Workforce
Consider the number of employees in your company who know what the Net Promoter Score is and what it means for your company. If there is a lack of awareness, you should concentrate on developing a customer-centric strategy and distributing it to all customer-facing teams. This can encourage them to follow these rules in all official correspondence.
The aim is to help them realize the significance of every customer. By inspiring them to actively seek feedback and promptly relay it to the department tasked with it, the scores will increase.
Keep Customer Interactions Positive
Every touchpoint with a customer can lead to a positive or negative perception of your brand. Therefore, ensure that every conversation starts on a positive note. Maintain a friendly attitude, have a brief casual conversation before getting down to business. Also ask questions to understand their issues and attempt to propose a solution.
Communicate the value they hold as clients for your company. Aim to end every interaction on a positive note, as that will be the lasting impression they have of your brand.
Promote Customer Feedback
In order to gather, examine, and learn from customer feedback, try to be open to it. Motivate your customers to propose product or feature ideas, engage them in discussions about your future plans, and provide them the opportunity to schedule onboarding and support calls.
Show them that you are listening and are prepared to engage in a fruitful collaboration!
Always Follow-up with Customers
When customer feedback is received, acknowledge it by following up with the customer to express gratitude for their insights and honesty.
Explain how their feedback will be utilized and implemented. If there’s positive news to share with a client, such as the launch of a new product feature, personally email them to inform them of this accomplishment and let them know that they played a part in it.
Transform NPS Detractors into Promoters
To significantly improve or have a good NPS score, devise a communication strategy specifically targeting your detractors. Reach out to them, ask for their collaboration, and listen to their issues.
Be transparent in your interactions with them, admit your business’s shortcomings, and work towards resolving their primary concerns. Aim to alter their customer experience from negative to positive, thus converting them into promoters!
Don’t Overlook Passives
Do not neglect your passives, 7 & 8. Although they currently do not impact your score, it’s worth exploring what could convince them to become advocates for your company. Earning their loyalty may require time and patience due to their unpredictable nature. But involving them in dialogue and showing that you provide more than just a product or service might sway their overall perception in your favor.
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After understanding the different NPS scores and the primary techniques for determining a good NPS score, you now know what constitutes a strong NPS score.
While it’s beneficial to measure your performance against others, the fundamental aim should be to increase your NPS score to the highest level possible. This is due to the fact that an increased NPS score leads to more endorsements and a larger customer base choosing your services. It also enhances the loyalty and retention of your existing clientele. Considering that customer acquisition can be up to five times more costly than retention, this can lead to significant savings.
Nevertheless, such a goal can only be accomplished if you consistently strive for improvement. This involves continuously soliciting customer feedback and subsequently analyzing and responding to their insights. By doing so, you increase the likelihood of customers returning and making repeated purchases, thereby fueling your future expansion and prosperity.