Marketing Strategy

Net Promoter Score (NPS): What It Is and Why It Matters for Your Business

08.01.2024 4 Minutes
What Is Net Promotor Score (NPS)?

What Is Net Promotor Score (NPS)?

The Net Promoter Score (NPS) is a research metric that measures customer sentiments about your brand based on their response to a single question—how likely is it that you would recommend this company to a friend or colleague? In addition to offering insight into client perceptions about your brand, this rating is also a measurement you can use to assess where your business stands compared to others in your industry. Most commonly, companies determine their NPS score by surveying customers either internally or with the support of a third-party consultant. The measurement is most effective when incorporated into a comprehensive customer experience program and calculated at regular intervals to monitor trends and gauge progress.

Why Measure NPS?

Developed by Bain and Company, NPS is a single, easy-to-understand metric that predicts overall company growth and customer lifetime value. According to Qualtrics, it’s “the gold standard of customer experience metrics” that is used by millions of businesses worldwide.

Net promoter scores offer several benefits, including being a quick and easy way to assess your organization’s standing with partners and clients, an ongoing measure of the success of your customer experience initiatives, and a tool for benchmarking against competitors in your space.

How to Collect NPS Data

There are many channels a company can use to collect NPS scores. For professional services firms the information can be collected through an emailed survey at key touchpoints during the relationship or in one-on-one interviews with partners and clients. The survey can come directly from the firm or many find that a third-party consultant can be helpful in “taking the pulse” on their behalf. An external consultant can bring best practices for survey design and distribution, as well as a level of unbiased and objective feedback. Consultants can often probe further for underlying issues as well.

How to Measure Your NPS

As a consumer, you’ve likely been asked the net promoter question following a purchase, a customer service engagement or even a website visit. The survey asks how likely you are to recommend the company to a friend of colleague on a scale of 0-10, followed by an opportunity to explain your reason for the rating. The responses to this open-ended question can help you pinpoint which specific areas in your overall client experience are working well and where there may be room for improvement.

To produce the NPS score, clients are categorized into the following groups based on the ratings they gave:

  • Promoters (Rating of 9-10): Loyal customers who are likely to return and spread positive sentiments about your brand.
  • Passive (Rating of 7-8): Customers who had no problem with your business, but are less likely to tell others about you and may be easily swayed by a competitor.
  • Detractors (Rating of 0-6): Customers who had bad experiences with your firm and are likely to spread negative sentiments about your brand.

Once you’ve collected the scores from each surveyed individual, you can calculate your NPS by subtracting the overall percentage of detractors from the overall percentage of promoters. In other words, % of Promoters – % of Detractors = NPS. Scores can range from -100 to 100, with the goal being the highest positive score possible.

What Your NPS Means

Your NPS gives you tangible insight into your clients’ opinion of your brand, and is a great way to monitor your business. This score indicates, at a specific point in time, how happy your clients are with your company.

When evaluating what your score means, there are a couple of contexts to consider:

  1. What is the benchmark for your industry? For example, if your NPS is 45 and the industry standard is 30, your company is above average compared to your peers.
  2. What trends are you seeing over time? Is the score going up or down? How does that relate to changes in your business?

How to Improve Your NPS

Never get discouraged by an NPS score. Qualtrics explains that, “It’s important to think of NPS as a part of an ongoing process of improvement.” It’s impossible to improve without understanding the opportunities that exist. Take the feedback from your customers and focus on what pain points they may have. Hone in on one issue at a time and work internally to find solutions to improve that aspect of your company.

Pay close attention to the feedback your clients provide in the open-ended question explaining their rating. This is invaluable information on areas that are working well and any that are creating unnecessary friction. Where are the greatest opportunities for improvement? Focus your efforts there first, rather than trying to solve everything at once. As you continue to measure your NPS score over time, you should see tangible evidence of the success of your efforts.

NPS and The Future of Your Business

As you start tracking your NPS score you will begin to understand client perceptions and identify areas of improvement within the customer experience your firm offers to clients. You should always have a clear vision of your firm’s strategy, where the customer experience fits into this overall picture, and how the NPS score can be an effective benchmark for tracking the successful implementation of internal programs. If your score is in the range you want and even improving over time, you are most likely on the right track. On the other hand, if your score is decreasing, that could indicate there’s room for improvement.

Remember to pay attention to what your customers are saying. After all, their opinions are the only ones that really matter about your company. Take your NPS and their responses seriously and strive to give them a better experience by communicating your gratitude for their feedback, letting them know how you are using it to implement improvements, and regularly checking in with them to understand how you are meeting their needs.

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