Net Promoter Score (NPS) is a customer loyalty and satisfaction measurement used to determine, on a scale of 1-10, how likely customers are to recommend a product or service to others.
In 2003, Fred Reichheld, a partner at Bain & Company, devised NPS as a new way for organizations to measure customer loyalty. Fred Reichheld shared this methodology so it can be used by any organization with the hope that it’s used to transform organizations.
NPS is a valuable metric for every business, it guides you to understand your customer’s perception of your business, their satisfaction and their enthusiasm for your business.
Following the footsteps of Fred, we’ve decided to share our NPS survey template that you can use for your next survey. But before we do that, we’ll dig deeper into the NPS survey, why it is important, how frequently you should conduct NPS surveys, and what good NPS survey results are.
Let's get started!
NPS is important for every business, regardless of size or industry. Here's why:
Net promoter score surveys are very short and sweet. Unlike other questionnaires, they’re quite fast for your customers to fill in because there’s only 3 NPS survey questions.
They’re also simple to interpret and analyze.
When conducting NPS surveys, the follow-up questions help uncover why a customer may or may not recommend your business. By analyzing your customer's feedback, you get to know what you aren't doing right and what you need to do to improve your services.
This valuable feedback allows businesses to understand firsthand where there is room for improvement. Knowing what to change or work on gives you direction in redesigning your approach and setting goals and targets.
NPS surveys help you measure the probability of new and repeat businesses depending on whether customers are likely to or not to recommend your products or services. This information is vital in predicting business growth, cashflows, customer satisfaction, and the overall health of your brand.
Based on the survey responses you’ll be able to gauge whether there are any upselling opportunities with customers who have given you a high net promoter score.
NPS surveys aren't a one-off thing and when you compare your results from previous surveys, you’ll be able to see track changes and identify business trends over time.
For instance, you can track a respondent’s answer to the question “on a scale of 0-10 how likely are you to recommend our product/service to a friend or colleague?” over time and see how this answer changes over time.
Besides, you can use this metric to track the effect of changes in your business. For example, you may notice your NPS score gets higher in the quarter after you hired more customer success managers.
NPS surveys reveal a business's big picture. The survey lets customers express their real feelings and thoughts about your business. Not only do your customers give you a score, but they’ll also give qualitative feedback which explains why they gave that score.
For example, if a customer isn't satisfied with your services (meaning they aren't likely to recommend it to others), they may state what exactly they don't like about your service and suggest ideas on what they think you should improve on.
You’ll find out about your happy and unhappy customers, and where they are most frustrated in their customer journey, whether it’s on your website, pricing, or feature bugs.
The NPS's scoring system, -100 to +100, is a KPI for the whole business, and it's easy for everyone to understand and interpret. The score is relevant to the customer support team, and UX team, so everyone will know where the company lies.
A strong NPS score shows that the organization is performing well in all areas. On the other hand, a low score could indicate that some areas aren't doing well, so it's important to ask follow-up questions to pinpoint what areas of the business aren’t performing well.
NPS is a globally recognized metric that makes it easy to see how your business stacks up against your competitors. By identifying your position in the industry, you can then make the necessary changes and improvements to boost your score and keep up with your competition.
SaaS companies should conduct NPS surveys quarterly. Most SaaS companies run monthly or quarterly contracts, so if you conduct a survey quarterly, you’ll know if customers become unhappy and you’ll have time to address these issues. This will enable you to improve the customer experience.
If you run your surveys semi-annually or annually, you’ll be behind. Your customers might churn and you’re not able to identify why.
NPS = % Promoters - % Detractors
To get your NPS, take the percentage of promoters (customers whose answer is 9 or 10) and subtract the percentage of detractors (customers whose answer is 6 and below).
The net promoter score scale is categorized into three groups depending on how customers answer the “how likely are you to recommend <insert your company name> to your family and friends?” question.
These are the most loyal and enthusiastic customers who will likely act as brand ambassadors and recommend your products and services to others. They also tend to be repeat customers. Their answer on the score scale is mainly 9 or 10.
These customers are unlikely to recommend your business to others, and in most cases, they do not stick around or repeat purchases. They are also likely to discourage potential customers from seeking your services. Their score is between 0-6.
These are customers that won’t actively recommend your business but are less likely to damage your reputation. We can also say these customers are satisfied with your business but aren’t enthusiastic, meaning they can be vulnerable to competitive offerings.
Their score is mainly a 7 or 8. Although they’re not factored in determining the NPS, they’re usually so close to being promoters, especially if their score is an 8. So, it's important to follow up on them to know what you need to do to win them over.
Once you have your NPS survey results, the next thing to do is organize and analyze your results. Here’s how you do that:
For this demonstration, I created a sample survey and shared it with 7 colleagues. Full disclosure: this is demo data and is only for visualization purposes. The data does not represent Great Question.
Ideally, you’ll have an NPS survey tool that allows you to export your survey results to a CSV file. Just like I’ve done here.
Then you can import your CSV file to Google Sheets or Excel. Now it’s time to put on your data analyst hat and do some basic calculations.
Once you’ve exported your survey data, total the number of responses provided for each score.
So I have:
Add up the total number of responses provided for each group (promoter, passive, detractor)
So I have:
Calculate the percentage for each group.
Calculate your NPS score by % Promoters - % Detractors
So I have 43%-28% which is = 15
However, when you do your own NPS survey with real data, your figures might look closer to this:
For example, if 30% of respondents are detractors and 70% are promoters, your NPS score is 70 - 30 = 50.
A good NPS score will depend on the methodology you use to analyze your results. There are two common methodologies;
Absolute NPS method: Involves comparing your NPS score against the agreed-upon standard of a good score across all industries.
Relative NPS method: Involves comparing your score to other companies (competitors) in the industry.
Bain & Company suggest that:
Ideally, it's almost impossible to get to the 100-mark limit.
If you are using the relative methodology, the good score will change depending on the nature of your industry.
Ready to start measuring customer loyalty and perception, but not sure where to start?