Step by Step guide to calculating Net Promoter Score
Calculating the Net Promoter Score is critical to gauge your customers’ satisfaction and loyalty. And if you are of the impression that the NPS calculation is filled with a ‘tough-to-crack’ formula then, let me tell you it isn’t!
And trust me NPS calculation is not rocket science!
Net Promoter Score (NPS) Calculation): A Quick Overview
To calculate your NPS score, whether by using an 11- point or 5-point NPS scale, all you need to do is,
STEP 1: Ask your customers how likely they are to recommend your product to others.
STEP 2: Then, categorize their responses into promoters (9-10), passives (7-8), and detractors (0-6).
STEP 3: Subtract % of detractors from % of promoters. This is the foundational NPS formula. Now, the NPS score can be anywhere between -100 and +100.
STEP 4: At last, benchmark your NPS Score.
Or instead, use the NPS calculator below. It’s totally free!
Free NPS Calculator
However, you don’t have to calculate the NPS score with an efficient NPS tool. They update the score as soon as the feedback comes in on their dashboard. Here’s a list of top NPS tools that can help you with it.
Now that you know your NPS Score, what is the next step?
Is your NPS score good or bad? If it is 73, it is surely a good number. But what if your NPS score is 28? Is it bad? Not necessarily!
Assess the NPS score after Calculation: Methods
There are two methods to assess your NPS score right after its calculation:
1. Absolute Method:
This method helps you to make your NPS score an internal benchmark. Any positive integer can be deemed to be a good NPS score since it indicates the overall positive sentiments of customers towards the business.
But to gain a competitive edge in customer experience, all your teams need to work fiercely to boost this number and compare it with the Industry Benchmarks.
2. Relative Method:
This method helps you to understand where you stand against your competitors. Comparing your NPS Score with the Industry Benchmarks tells you how outstanding or poor your customer experience is against your competitors.
But, what is a bad NPS Score?
Let’s say you’ve got -25 after your NPS calculation. This is a negative NPS Score.
A negative NPS score means that you have more unhappy customers than those who enjoy your products or service. Simple!
Let’s take an example to explain such cases of the net promoter score.
Telecommunications giant Comcast has traditionally had poor NPS scores. It had a score of -3 in 2019. In fact, their customer service is considered so shoddy that they even had to promise US senators in 2016 that they would fix its service issues. Sadly, their NPS score is still negative.
So, what should you do to improve your NPS Score?
We’ve got you covered!
Here are the 11 surefire strategies that can help you increase the Net Promoter Score.
Click here to deep dive into these awesome strategies!
Now, let’s see how you can determine a good net promoter score.
How to determine a good net promoter score?
As a thumb rule, if the NPS score after the calculation is less than 20, it is a cause for worry. In other words, an NPS score above ‘20’ can be considered to be good, anything above ‘50’ is great, and anything above ‘70’ is excellent.
However, the average NPS varies significantly from industry to industry. So, what constitutes a good score for NPS score for the hospitality industry may not apply to the retail industry.
The best approach is to identify the NPS scores of your competitors so you know where you stand. This is why benchmarking your NPS score becomes important.
Benchmark your NPS Score
Compare your NPS score with the industry average
The NPS scores vary by industry. It is relative. There are a lot of factors associated with it. This is why benchmarking your NPS score becomes important. If yours is a SaaS business, you should not compare your NPS score with an insurance company’s score.
You also should take geographies and countries into account as well. There are countries like Japan where people usually give low ratings because it is considered rude to rate a business as either too good or too bad.
The survey channel and the methodology that you used to conduct the survey will have an impact on the NPS score as well. Use your previous NPS score as a benchmark. If you see the number improving, then you are on the right track.
To get a brief idea of where your business stands in terms of NPS, you must know the industry benchmark. A good resource to go to for this information is the 2021 Satmetrix Net Promoter Benchmarks report (for US consumers).
For example, you operate a retail store, and the NPS benchmarking in Retail reveals that your NPS score is 45, while the industry benchmark for retail stands at 55. In this scenario, it’s evident that there’s room for improvement to align with industry standards and meet customer expectations more effectively.
The survey was conducted for 221 brands in 23 industry sectors covering a whopping 6,500 respondents. Based on the survey, the NPS benchmark was derived as under:
Use this data to drive success!
Frequently Asked Questions (FAQ) about NPS and its calculation
According to the 2021 Satmetrix Net Promoter Benchmarks report (for US consumers), the average Net Promoter Score for software companies is 55.
Here are 9 strong reasons why you shouldn’t ignore the Net Promoter Score.
- The NPS question is the most simple feedback question there is.
- Measuring the loyalty of your customers is what NPS does best.
- It is found that a 7-point increase in NPS leads to an average 1% increase in revenue.
- NPS can help you point a finger at the many probable reasons why customers could be leaving.
- The qualitative feedback from the follow-up question assists you in prioritizing your product roadmap, keeping your existing customers happy, and boosting your retention rate.
- NPS helps you identify promoters, who are more likely to recommend your product to their friends and family, this is when you can upsell.
- It helps you convert customers into brand advocates.
- It helps you to identify disappointed customers as soon as they give you their feedback allowing you to connect with them immediately and resolve their issues.
- NPS helps you keep a pulse on the customer’s health.
Any positive integer is a good NPS score as it shows that the customers are positive towards your brand. However, the average NPS score varies from industry to industry. For example, the score of NPS in banking is 70 but for the software industry, it is 55. So, what may be a good NPS score for the software industry may not apply to the airline industry.
Yes, NPS can be negative. 0 or any NPS score below 0 is a negative NPS Score. It means that you have more unhappy customers than those who enjoy working with you.
Here are 6 ways to analyze your NPS Score:
- Categorize your respondents into promoters, passives, and detractors.
- Analyze feedback sentiment with sentiment analysis.
- Run text analysis on the open-ended feedback to identify trends.
- Identify the root causes.
- Identify the survey channel that works best for you.
- Benchmark NPS internally and with the industry average.
The NPS score can be anywhere between -100 and +100.
You can improve your Net Promoter Score by
- Talking to the detractors and resolving their issues.
- Getting passives to your side
- Make promoters love you more and convert them into brand advocates.
- Reach out to the non-respondents
‘On a scale of 0 – 10, how likely are you to recommend this product/service to your friends or acquaintances, this is the standard NPS question
- Make separate columns for Promoters, detractors, and passives
- Add up the total number of promoters
- Add the total number of detractors
- Calculate the percentage of promoters (Number of promoters/ total number of responses * 100)
- Repeat the same for detractors
- Use the NPS formula: % promoters – % detractors
NPS calculation is probably one of the simplest things to do. A simple formula and a simple calculation. That’s all that goes into it.
However, things can get a bit hard to handle when the number of respondents increases. If you have a larger customer base and you want to know the exact opinion of customers, the best option would be to go for an NPS tool like SurveySensum. The tool does everything from sending surveys to calculating NPS scores. It will even analyze your NPS scores and customer opinions to find the sentiments behind them, which means end-to-end automation! Try the tool now. It’s FREE!