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Step by Step Guide To Calculating Net Promoter Score

Tanuj Diwan
Nov 15, 2019

8 mins read

Tanuj Diwan

Net Promoter Score is one of the most popular metrics to gauge your customer’s satisfaction and loyalty. It asks them how likely are they to recommend your product to others.

It measures a customer’s overall perception of the brand, it is not based on a single interaction. This tells the brand how satisfied a customer is based on the variety of experiences they have had with you.

Let us Dive Deep into calculating NPS

“How likely are you to recommend our company on a scale of 0 to 10 to a friend or colleague?”

The simplicity of the question is what makes Net Promoter Score extremely powerful.

Based on the responses, the respondents are classified into the following three categories.

Detractors– 0-6

Passives– 7-8

Promoters– 9-10

Your Detractors are customers who are not happy with your brand and you are at serious risk of losing them. Not only that, they are more likely to post negative reviews about their experience on social media and any platform that gives them a voice.

Your Passives have neither been highly impressed with you nor do they dislike you. They are more likely to switch to a competitor. With consistent efforts, you can even make them Promoters.

Your Promoters are customers who love your brand, will stay loyal and are most likely to recommend you to anyone looking for a product similar to yours.

Calculate the NPS score

Subtract the percentage of detractors from the percentage of protestors to get your Net Promoter Score.

The Passives are left out of the calculation because there is no clarity on whether they would recommend or post negative reviews.

The NPS score can be anywhere between -100 and +100.

Let’s say you sent the Net Promoter Score surveys to 100 customers and the results are like this. 35% are Distractors and 60% are Promoters, then your NPS score would be (60%-35%= 25)

If your Promoters are 35% and Detractors are 60%, then your NPS score would be -25.

What is a good Net Promoter Score?

A score above 50 is considered excellent. But any NPS score that is positive is considered good. If your NPS score is in the negative, then you need to make changes to your business immediately since you can expect more of your customers to leave your business.

It will make sense to identify the NPS scores of your competitors so you know where you stand.

Is your NPS score in the negative?

A negative NPS score means that you have more unhappy customers than those who enjoy working with you. As simple as that. In fact, not all is lost if you have a negative NPS score.

It is found that industries in which negative-option billing has ridiculously low NPS scores as customers don’t like it. Negative-option billing is an aggressive sales technique where customers are billed automatically.

Don’t most SaaS companies use this type of billing method too, you may ask?

Yes, but there is a difference. The billing practices of SaaS companies are not deceptive.

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. It’s sad that their NPS score is still in the negative.

Even a bad perception, thanks to a scandal could result in negative (or decreased) NPS score as people’s positive sentiment towards your company reduces significantly. In 2013, after a series of scandals, HSBC was on the wrong side of NPS when it scored -23.

Here’s a caveat for your NPS score

Profitwell, a software subscription service recently conducted a study that analyzed the data of more than 5,000 subscriptions and 25,000 customers. It found that the average NPS scores were between the 20s and 30s five years ago. But these numbers have significantly come down dropping to even single digits.

It could be because the competition is extremely high and customer’s expectations have shot up. As a business, you need to come up with ways to keep them satisfied with you during each stage of the customer journey.

Benchmark your NPS score

Is your NPS score good or bad? If it is 73, it is surely a good number. But what if your NPS score is 8. Is it bad? Not necessarily. Your NPS score is relative. There are a lot of factors associated with it. This is why benchmarking your NPS score becomes important.

Compare your NPS score with the industry average. If yours is a SaaS business, you should not compare your NPS score with an insurance company’s score.

The NPS scores not only vary by industry, but you also have to take geographies and countries into account as well. There are countries like Japan where the 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.

Average NPS scores of various industries

Find the average Net Promoter Score in 23 industries (the US only), thanks to Satmetrix’s 2019 NPS Benchmarks at a Glance report, below:

Net Promoter Score in 23 industries (the US only)

 

How to improve your Net Promoter Score

Having a low NPS score can be discouraging for the business. You can increase the NPS score by making a series of consistent efforts. Here’s what you can do.

Talk to your Detractors

Ask your Detractors where you went wrong and promise to serve them better. A phone call would be the best way to re-engage with them. Question them about the areas that need a change according to them so that they will like your business better. Assure them that they would not have to come across any more issues when working with your business. .

Get Passives on your side

Talking to Passives will give you deep insights and put you in a position where you can turn them into a Promoter. The best way to make that happen is to offer them incentives or anything extra that would make them closer to your brand.

Make your Promoters love you more

While any business would assume that it would be impossible for a Promoter to leave your business, it might eventually happen when you take them for granted. Reward their loyalty. Offer them loyalty points, referral points, exclusive access to your product and upgrades. All of these actions will bring them even closer to you.

Reach out to the ones who don’t respond

The number of customers who don’t respond will form the largest segment. Try to make them engage with you so you can have better representation with more responses. Send personal emails, webinars, chats, etc, to get them on board.

More steps to take with your NPS score

  • Collate the responses from the follow-up questions that ask why they gave a particular rating
  • Your NPS score results over the past few months
  • Send the NPS reports to different team members based on what is relevant to them. For eg: tag customer service related responses to the CS team.
  • Work on creating more Promoters
  • Open a communication platform for all the participants of the survey. Use this to complete the feedback loop. United is considered to be one of the worst airlines in the US. Their NPS score has always been low, especially when compared with its competitors like Southwest, JetBlue, Virgin America, etc. Net Promoter Score of United, JetBlue, and Virgin are -8, 68 and 51 respectively. Guess why? United doesn’t close the feedback loop. They don’t do anything with the NPS survey feedback.
  • Draft a bunch of follow-up questions to ask the NPS survey respondents

Conclusion:

NPS has surely changed the landscape of surveys. Earlier, surveys used to be drab and long which reduced the response rates as customers weren’t happy putting in a lot of time to fill out business surveys.

It is easy for the respondents and requires little time to complete it. The results from NPS are highly actionable and it’s easy to benchmark since you can compare it over time. The NPS survey results also help you identify customers who are more likely to leave you for a competitor.

 

Leaving you with this quote from the creator of NPS.

“It’s not the score that matters; it’s what you do with it to make Promoters that really counts.” – Fred Reichheld, Bain & Company

Customer Experience Trends 2020

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