Net Promoter Score Explained

As a business owner, how can you make sure that your customers are loyal and likely to recommend your business to their friends and family? There’s an easy way for businesses to measure customer loyalty: Net Promoter Score (NPS). Net Promoter Score allows businesses to monitor customer satisfaction and loyalty.

What is Net Promoter Score?

Net Promoter Score is meant to be a gauge of overall customer experience. The higher your NPS, the more satisfied your customers are with your business.
 
To determine Net Promoter Score, customers are asked how likely it is that they’d recommend your business to family and friends on a scale from 0-10. Based on their response, they are sorted into three categories: Promoter, Detractor, and Passive. Let’s go through all three. 

Promoter

A promoter is a customer who rates your business as a 9 or a 10. These customers had a great experience and are likely to act ask brand evangelists, telling friends and family about to visit your business. 


Detractor 

A detractor is a customer who rates your business from 0-6. These customers were not satisfied with their experience and would not recommend your business. It’s possible that they might even spread negative word-of-mouth and drive potential customers away. 


Passive 

A passive is a customer who rates your business as a 7 or an 8. While these customers might not have a negative view of your business, they’re not likely to actively recommend your business to others either. 


Calculating Net Promoter Score 

To calculate your Net Promoter Score, simply look at the percentage of promoters you have and the percentage of detractors you have. Subtract the percentage of detractors from the percentage of promoters to find your Net Promoter Score.

How Net Promoter Score Helps Retain and Acquire Customers

Once you know your Net Promoter Score, you can understand how well your business is doing at building loyal customers. A high Net Promoter Score shows that your business is doing a great job delighting customers. Meanwhile, a low Net Promoter Score shows that there are steps that you could take to improve your customer experience. 


According to Bain & Company, there’s a direct correlation between Net Promoter Score and increased revenue. Industry leaders outgrew competitors by a factor of 2x. Effects are even stronger when you have a lot of competition. After all, when customers have a lot of options, they will naturally gravitate to the best business. 

Estimating Net Promoter Score with Online Reviews

Just a couple of decades ago, it was a lot harder to know how customers actually felt about your business. The logistics of actually conducting a random survey on your customer base in the days before the Internet was pretty difficult for most businesses.
 

Luckily, finding your business’s Net Promoter Score is now easier than ever. Here are some easy ways a business can see how well they’re doing at engaging their customers. Today, real customers are sharing their opinions on your business and millions of others on the hundreds of review sites online. 


Most review sites have reviewers rate businesses on a scale of 1-5.
 

In order to convert this into the NPS scale, just multiply by two. A 1-star rating is a 2 on the NPS scale, a 2-star is a 4, and so on.  


Competitive Benchmarking with Reviews

Of course, your competitors’ online reviews are publically available as well. You can use their review data to estimate their Net Promoter Score. By doing this, you’ll be able to see how well you’re doing at engaging your customers compared to your competitors.
 

By comparing your reviews with your competitors, you can see how well your business is performing. If you consistently have a lower NPS than your competitors, chances are that there’s something that you can learn from their business operations. 


Finding Net Promoter Score with Customer Surveys 

Of course, you don’t have to just wait for customers to submit reviews to find your Net Promoter Score. You can also send Net Promoter Score surveys to your customers via email and/or text. 
 

You can keep the Net Promoter survey short and simple. Ask your customers the following. 


“On a scale of zero to ten, how likely are you to recommend our business to a friend or family member?”


If you want more detailed feedback, you can give your customers the option to explain why they left the number that they did. This can help you understand what is and isn’t working with your business operations. 


Remember, it’s important that you don’t send NPS surveys to the same customers twice within a short span of time. This can be a little too much for customers. Random samples of new customers also help to provide more accurate feedback. 

How to Improve Net Promoter Score 

Of course, measuring your NPS is only half of the story. Once you’ve measured your NPS, you need to know how your business can start improving. 


The first step to improving your Net Promoter Score is making sure your business is committed to improvement from top to bottom. Make sure that your employees have access to the data and know where they can improve. 


Next, it’s important to analyze your Net Promoter Score. Dig deeper to find the areas in your customer experience where customers are experiencing the most friction. Look out for patterns in customer reviews and surveys that show you where you can start improving your business operations. 


For any change that you make, it’s important to continually track your business’s NPS. This is a great way to measure the effectiveness of any changes that you make. If you make a change that ends up actually hurting customer satisfaction, you can roll it back as soon as possible. 



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