What is this lesson about?
This lesson is about Net Promoter Score, otherwise known as NPS. You will learn about what NPS is, why it is an important metric to measure customer satisfaction and how to calculate NPS. This is part of our ongoing learning about evaluation of customer satisfaction.
Please contact juliefossitt[a]gmail.com to request this lesson in an alternate format.
What we have learned so far:
In our course, we have learned about a range of ways to measure customer satisfaction. The metrics include Customer Service Satisfaction (CSS); Customer Effort Score (CES); Customer Satisfaction Score (CSAT); Customer Health Score (CHS); Customer Churn Rate (CCR) and customer reviews.The metrics are important for organizations in every sector, as they continually strive to improve the experience of every step of the customer journey.
What is the NPS or Net Promoter Score?
Net Promoter Score is one of the most popular and universal methods to measure customer satisfaction. You have probably received an email after making a purchase or been asked in a survey the following question: “How likely are you to recommend our products and services to your loved ones and colleagues” and then you are presented with a selection of numbers from 1-10.
It could look something like this:
The results from this one question from respondents are used to calculate an organization’s Net Promoter Score. Net Promoter Score was first developed in 1993 by Fred Reichheld and later adopted in 2003 by Bain & Company and Satmetrix as a way to predict customer purchase and referral behaviour.
According to the Bain & Company website, “high scores on the NPS question correlated strongly with repurchases, referrals, and other customer behaviors that contribute to a company’s growth.”
Watch this short video from SurveyMonkey to learn more about how the NPS score is calculated, how to use the NPS in your marketing work and why NPS is important to measure customer satisfaction. If you require this video in an alternative format, we invite you to turn on closed captions or read the accessible article here.
How is the NPS calculated?
The NPS is calculated using a scale that is related from 0 (not at all likely) to 10 (extremely likely). Depending on the responses, customers fall into one of 3 categories:
- Promoters are customers who respond with a score of 9 or 10. Typically, these customers are loyal and enthusiastic customers.
- Passives are customers who respond with a score of 7 or 8. These customers are satisfied with your service but not happy enough to be considered promoters. Passives are NOT used when calculating your overall NPS.
- Detractors respond with a score of 0 to 6. These are unhappy customers who are unlikely to buy from you again, and may even discourage others from buying from you.
The formula to measure NPS is:
Total % of promoters – total % of detractors = net promoter score
Why does NPS matter to you?
NPS is important as it’s a standard measure of customer satisfaction that is relatively easy to use. You can collect answers to this question from customers at all points in the customer journey including over the phone, by email, on a website, on your app, and more. You can also reach out to detractors – those who scored between 0 and 6 – to find out what you could do better. All of this information provides valuable feedback to organizations.
Now it’s time to test your NPS knowledge!
Click on the image below to complete the quiz.
