The Net Promoter Score has become an essential indicator of customer satisfaction. Many businesses have already adopted it, and for good reason. Known by the acronym NPS, it helps to distinguish satisfied customers from dissatisfied customers, and even better, it helps identify brand ambassadors, understand how to retain them, and transform them into powerful acquisition levers.
So how and why do you use an NPS survey? Here's most of what you need to know about it.
1- Net Promoter Score: Definition
The Net Promoter Score (NPS) is an indicator widely adopted and used by businesses. Promoted by Frederick Reiccheld in the early 2000s, it made it possible to measure customer satisfaction and loyalty to a brand, product or service. It is based on a single question: “Would you recommend this application?” The answer is on a scale of 0 (“Not at all”) to 10 (“Absolutely”).
Based on their responses, users are classified into three categories:
- The Detractors (0-6 score) : They are not particularly satisfied or even disappointed with the product or service. They will therefore share their negative experience with those around them, which can damage the reputation of the brand, product or service.
- The Passive (score of 7 or 8), also called neutrals, are neither satisfied nor dissatisfied.
Passive people are convinced by the quality of the product or service without being delighted. They can easily change providers if the opportunity arises. As a result, they will not speak ill of the brand but will not promote it either.
- The Promoters (score of 9 to 10)) are the brand's most fervent customers. Very satisfied with the quality of the product or service, they are loyal and even go so far as to become brand ambassadors. They recommend this one to those around them by sharing their own experience.
2- How to calculate your NPS?
The NPS score is in the range of -100 to 100.
Once the results of your survey have been collected, you must first exclude responses from the “passive” category and convert the number of respondents from the other two categories (promoters and detractors) into a percentage. The Net Promoter Score calculation consists in subtracting the percentage of detractors from the percentage of promoters.
For example out of 1000 respondents, you get:
- 250 detractors (25%)
- 450 promoters (45%)
- 300 liabilities (30%)
The NPS score obtained will be 20.
Calculation formula: [Percentage of promoters] - [Percentage of detractors] = NPS score
So: 45-25 = 20
Once the NPS score is calculated, how do you know if it is positive or negative?
First, to be able to qualify an NPS score as good, it must be positive.
As seen above, the Net Promoter Score score can vary from -100 to 100.
To guide you as much as possible in understanding the score obtained, here is a proposed scoring system.
- 100 : The ultimate score is very unattainable, let's be honest. 100% of the participants are fervent supporters of the brand. They are all thrilled with the product or service offered.
- NPS greater than 70 : very rare, indicating a fan base and an exceptional popularity of the brand.
- NPS greater than 50 : considered excellent, with a majority of very satisfied customers.
- NPS greater than 0 : considered good, indicating as many fans (those who recommend the product) as there are neutral or critical people.
- NPS negative : a majority of participants do not like the product or service and will therefore be unlikely to recommend it positively. This is an important alert to take into consideration in order to quickly bring areas for improvement.
- -100 which means that no one likes the product or service. It's a worst-case scenario.
3- Advantages and limitations of an NPS survey
There's nothing magical about the Net Promoter Score. Like any measurement indicator, it offers numerous advantages but also has some limitations.
Benefits
- Simplicity and ease in implementation
The NPS is simple to administer because it is based on a single main question: “How likely are you to recommend our product/service to a friend or colleague?” This simplicity allows responses to be collected quickly and without complicating the respondents' experience.
- Clarity of results
The NPS calculation is straightforward and easy to understand. It is based on a scale of 0 to 10 and allows respondents to be classified into three categories and the final score is intuitive to give a clear indication of the overall health of the customer relationship.
- Comparability
NPS is a standardized indicator that compares customer satisfaction across different industries, businesses, or time periods. This facilitates internal and external benchmarks, allowing companies to compare themselves with the competition or to monitor the evolution of their performance.
- Orientation to action
NPS is highly correlated with customer loyalty and their likelihood of recommending the business. A low NPS score encourages corrective actions to improve the customer experience. Additionally, it encourages businesses to focus on converting detractors into promoters, thereby increasing growth potential through positive word-of-mouth.
- Listen to the customer
NPS surveys often include an open-ended question that allows customers to explain their grade. This provides valuable qualitative insights that can reveal specific issues or opportunities for improvement. This feedback can be used as a basis for further analysis and customer service initiatives.
- Fast feedback
The concise format of the NPS survey allows for rapid data collection, facilitating near real-time analysis. Businesses can thus react quickly to problems or capitalize on opportunities identified by respondents.
- Impact on strategy
NPS is often used as a key performance indicator (KPI) in organizations. It helps align teams with the common goal of improving the customer experience, by facilitating communication and collaboration between different departments.
- Growth forecast
NPS is a good predictor of future business growth because it is linked to the likelihood of positive recommendations and customer loyalty. A high NPS is often associated with better customer retention and lower customer acquisition costs.
Limits
The Net Promoter Score (NPS) is a commonly used indicator to measure customer satisfaction and loyalty. However, despite its usefulness, it has some limitations. Here are some of the main ones:
- Excessive simplicity
The NPS is based on a single question: “How likely are you to recommend our product/service to a friend or colleague?” This simplified approach doesn't capture the full complexity of customer feelings and opinions. Important nuances about the reasons for satisfaction or dissatisfaction may be lost.
- Lack of specificity
The NPS does not provide detailed information about specific aspects of the customer experience that need to be improved. For example, a customer might give a poor grade because of a specific problem (like customer service or product quality), but NPS alone doesn't reveal that cause.
- Response bias
Responses to the NPS can be influenced by biases. For example, customers who are very satisfied or very dissatisfied are more likely to complete the survey, while those who are neutral or moderately satisfied may not pay attention to it. This can skew the results.
- Cultural influence
Perceptions of the rating scale can vary across cultures. For example, in some cultures, people are naturally more likely to give high or low scores, which can affect the comparability of results across countries or regions.
- Temporality of responses
NPS reflects a snapshot of customer feelings at a given point in time. Opinions can change rapidly due to a variety of reasons (such as a recent bad experience or improved services), and the NPS does not capture these dynamics on an ongoing basis.
- Actionability
While NPS provides an overall indication of customer loyalty, it can be difficult to translate a score into concrete actions without additional information. It is often necessary to complement the NPS with qualitative surveys to understand the reasons behind the scores and identify specific areas for improvement.
- Influence of the context
The answers may be influenced by the context in which the question is asked. For example, right after a recent positive or negative interaction with the company, responses may be biased by this immediate experience, rather than reflecting a general opinion.
In short, NPS is a useful but limited indicator. It is often best used in combination with other assessment methods to get a more comprehensive and nuanced view of customer satisfaction and loyalty.
Conclusion
The Net Promoter Score (NPS) is a powerful and widely adopted tool for measuring customer satisfaction and loyalty. Its simplicity, clarity and potential for action make it an indicator of choice for many businesses seeking to understand the state of their customer relationships and to guide their improvement strategies. However, despite its many advantages, it has several limitations (cultural influence, temporality, complexity of feelings, etc.). This is why, by itself, the NPS is not enough to understand, analyze and act in order to strive for a maximum satisfaction rate.
With Weloop it is possible to combine an NPS form and a satisfaction survey, to obtain a more complete picture of user satisfaction, identify the real drivers of loyalty and guide your actions more effectively.
Do you want to know more? Contact us
%20Weloop_logo.svg){kind=logo}