Net Promoter Score(NPS) - FAQ

Net Promoter Score(NPS) is a great metric for measuring customer loyalty, but it is also a more complex metric to use, especially when first trying to understand it. In this blog, we answer some of the Frequently Asked Questions that we have seen around Net Promoter Score(NPS).

What is the Net Promoter Score?

Net Promoter Score or NPS is a way to measure customer loyalty and customer experience scientifically. The NPS survey consists of only two questions to be answered by the customers. The main strength of NPS lies in its short format that gives a value that in turn helps in growing your customer base and also encourages your existing customer.

How can I use my Net Promoter Score?

Net Promoter Score(NPS) gives you a value for your brand or product, that can be compared to the average NPS of your industry. So that you can clearly get the picture of where you stand on the scale of customer loyalty and the gap to be filled to give the customer a better experience.

How do I calculate my Net Promoter Score?

The Net Promoter Score calculation is very simple, You need to ask your customer two main questions, The first one is

1. “How likely is it your recommend our product to your friend or colleague?”,- Measured on a scale of 1 to 10.
2. “What’s the most important reason for your score?”.

It’s really that simple. Check Net promoter score calculator, to know more.

What is the NPS Formula?

When you get answers to the two questions of the NPS survey from your customers, then we use a simple formula to calculate the NPS value. Now,
Three simple steps to follow,

1. Calculate the total number of respondents,
2. Calculate the number of respondents who gave you a 9 or 10, they are called “Promoters”.
3. Calculate the number o respondents who gave you a score of 0 to 6, they are called “Detractors”.

The Net Promoter Score is calculated by subtracting the percentage of Detractors from the percentage of Promoters. So, if 50% of respondents were Promoters and 10% were Detractors, your Net Promoter is a score of 40. It is as simple as that.

How do I interpret my Net Promoter Score?

Many large companies are using NPS scores as the reliable Customer Feedback Tool. Interpreting the NPS value of a company starts by analyzing the average NPS of the industry and culture where the business is operating. Now compare the individual scores with the industry’s average.

For example, let us take Car manufacturing industry in a particular sector, where the NPS lies around 50, if your company’s NPS is 40, then you are performing fairly well among your competitors. So you can ensure your marketing techniques are pitching perfectly, now you must work towards establishing a stronger bond among your existing customers.

What can I do to improve my Net Promoter Score?

An NPS score acts as well established Customer feedback system in your marketing loop. To improve your NPS score, you must identify the gap where your company lags behind other competitors. The second question of the NPS survey is the best way to identify that. By knowing that, you can make modifications to the product, brand, or marketing techniques to improve customer satisfaction.

How accurate is the Net Promoter Score?

Net Promoter Score was developed by testing various questions to find which one was best aligned with customer loyalty. NPS was then developed further and eventually trademarked by Fred Reichheld along with Bain & Company. Bain & Company argues NPS as the best customer loyalty metric available so far in the industry.

Do I need to send the NPS survey after every purchase?

It is not necessary to send the NPS survey after every purchase unless you want to measure the loyalty for an individual product. If you want to measure the loyalty for a brand or a company, you could choose a particular time interval like every 6 months, you can send the NPS survey to your customers and get their feedback. This helps you measure what people think of your company overall, not just about every individual purchase.

What is a good NPS score?

A good NPS value varies accordingly for each and every industry. For example, let’s say you are in a food manufacturing industry, and the average NPS of the industry is around 40, and your company’s score is 35, then it is a pretty good score. You are doing really well in your industry, that’s what the value says.

How do I use the Net Promoter Score to improve my business?

The management people in a company are looking for a bigger picture of metric used to know customer loyalty, NPS plays a perfect fit in that place.

The NPS value of a company helps to understand the competition within your industry, and how your product/service doing against the competition. It also helps you identify the place where you need to concentrate within your organization to deliver better results.

How do I use the Net Promoter Score to improve my products?

An NPS score acts not only as a customer feedback metric but also helps you identify the gap in the industry, where your competitor’s product lags and your product bags that particular feature. This analysis helps to improve the product thereby improving customer satisfaction.