The Net Promoter Score (NPS) is a customer loyalty metric that businesses use to gauge how their customers feel about them. [5]:49–51 Reichheld and Markey developed the methodology by comparing the ability of several different questions to predict future purchases and referrals of individual respondents. In other words, it helps you see trouble comingâjust like sonar on a boat helps you spot icebergs in time to course-correctâboth at the individual and macro customer level. â Read the chapter on how to calculate NPS. : 51 The Net Promoter Score is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. "[30] Furthermore, losing detractors as customers can improve the NPS while the business eventually suffers. These additional questions help a company rate the relative importance of these other parts of the business in the overall score. Satisfaction as a Predictor of Future Performance: A Replication. In the Net Promoter system, customers are categorized into three groupsâpromoters, detractors, passivesâdepending on how they answer the standard âhow likely are you to recommend usâ question: Promoters (score of 9 and 10) represent a companyâs most enthusiastic customers: these people are likely to act as brand ambassadors, enhance a brandâs reputation, and increase referral flows, helping fuel the company's growth. With Net Promoter Score (NPS), you can quantitatively measure and then encourage customer loyalty. Net Promoter Score® is an indicator that can change over time and by point in a buyer lifecycle. [21], Research by Keiningham, Cooil, Andreassen and Aksoy disputes that the Net Promoter metric is the best predictor of company growth. At -100, every single person who responds is a detractor. Hereâs how to read your NPS results after running the survey and collecting data: Your company's Net Promoter scores may vary across different segments (e.g. Although NPS measures the likelihood of an action based on past experience, it has proven to be a reliable predictor of future business growth or decline. [5], Those who respond with a score of 9 to 10 are called Promoters, and are considered likely to exhibit value-creating behaviors, such as buying more, remaining customers for longer, and making more positive referrals to other potential customers. Respondents who provide a score of 7 or 8 are referred to as "passives" and enter into the overall percentage calculation. NPS is a popular customer experience metric because it is simple, effective, and correlated to revenue growth. Problems With the Net Promoter Score. "[24], "Recommend intention alone will not suffice as a single predictor of customers' future loyalty behaviors. predictions even further. Net Promoter Score is always expressed as a number from -100 to 100; the score is negative when a company has more detractors than promoters, and positive in the opposite situation. It is a management tool used as a measure of customer satisfaction and has been shown to correlate with revenue growth relative to competitors. In your initial Net Promoter Score survey, you donât want to ask numerous questions. Although they are not included in the NPS calculation, passives are very close to being promoters (particularly when they give a score of 8), so it always makes strategic sense to spend time investigating what to do to win them over. Lack of superiority to other loyalty-related questions, No evidence for 11-point scale superiority, Reliability compared to a composite index of questions, Lack of predictive power for loyalty behaviors, Not suitable as key performance indicator, Call Centers for Dummies, By Real Bergevin, Afshan Kinder, Winston Siegel, Bruce Simpson, p.345. The standard NPS question is âOn a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?â. One is the rating question which asks customers to rate the business/product/service on a scale of 1 to 10. Therefore it is worth surveying for NPS® on a time basis as well as on a lifecycle basis. For some industries, notably software and services, it has been shown that Detractors tend to remain with a company and Passives leave. Now that we know the information that we need gather, let's review how you can calculate this metric using a three-step process. Net Promoter Score (NPS) is a customer loyalty and satisfaction measurement taken from asking customers how likely they are to recommend your product or service to others on a scale of 0-10âbut thereâs a lot more to the story than that. Responses of 7 and 8 are labeled Passives, and their behavior falls between Promoters and Detractors. You can set up the NPS survey so it appears on your main conversion pages (for example, the thank you page people see after completing a purchase), or trigger an exit survey right before people leave the website. [18] It has also emerged as a way to measure loyalty for online applications, as well as social game products. [5]:61–65[5]:77–81[9] Importantly, Markey points out that "competitive benchmark" Net Promoter Scores collected through a carefully constructed double-blind Quantitative marketing research methodology provide the only valid basis for comparing scores. Those who respond with a score of 0 to 6 are labeled Detractors, and they are believed to be less likely to exhibit the value-creating behaviors. This said, even if the bar is set low, a negative NPS is a sign that a business has some serious work to do to improve the situation, reduce the number of unhappy customers, and generate more promoters. â Read more about NPS scores and benchmarks, If you are interested in calculating and tracking NPS for your business, the first step is to run an NPS survey to collect customer feedback. To help you, we look at three Net Promoter Score questions to ask in your next survey. [6], Companies are encouraged to follow the likely-to-recommend question with an open-ended request for elaboration, soliciting the reasons for a customer's rating of that company or product. This proven metric transformed the business world and now provides the core measurement for customer experience management programs the world round. Iâve always found it to be powerful survey question to determine overall customer sentiment. This guide covers what you need to know about NPS, including chapters on the Net Promoter System, what questions to ask as part of your NPS survey, how to calculate your score, and how to improve your NPS. [5]:175–198 The Net Promoter survey will identify customers who need follow-up, including Detractors, and should automatically alert the provider to contact the consumer and manage the follow-up and actions from that point,[11] a practice followed by companies such as Scotiabank. Confronts the Curse of the Conglomerate," New York Times, 16 August 2006, "Another Myth Bites The Dust: How Apple Listens To Its Customers," Forbes.com, 26 August 2011. Ratings of 9 or 10 indicate promoters; 7 and 8, passives; and 0 through 6, detractors. Lisch comes to the conclusion that contrary to the claim that the Net Promoter Score is "the one number you need to grow", the NPS is not suitable as key performance indicator. [5]:12–13, While the Net Promoter Score has gained popularity among business executives and is considered a widely used instrument for measuring customer satisfaction in practice, it has also generated controversy in academic and market research circles. Net Promoter Score®, or NPS®, measures customer experience and predicts business growth. NPS is then calculated as the percentage of âpromotersâ (people who scored 9 or 10) minus the percentage of âdetractorsâ (people who scored 0 to 6, included). It comes from the question, âHow likely is it that you would recommend (insert company or product/service) to ⦠Because NPS is a real-time metric, you could look at it on a daily basis if you wantedâbut its true power is revealed over time, when you can see trends and fluctuations: It may be difficult to get high response rates for every NPS survey you send out. Copyright © 2014 - 2021 Hotjar Ltd. All rights reserved. Business Week, 29 January 2006. NPS can be used as a predictor of business growth. Net Promoter Score = (Number of Promoter Scores/Total Number of Respondents) - (Number of Detractor Scores/Total Number of Respondents) Or, for a more visual representation, we can use this handy graphic. You can even add a third optional question for people to share their ideas on what else you should be doing. What is Net Promoter Score (NPS) Net Promoter Score (NPS) is a system thatâs meant to go beyond testing the satisfaction levels of the customer with the company. It's mind-boggling that so many companies would rely on the Net Promoter Score as a key management metric when you consider that the score: Given the available -100 to +100 range, any score above 0 reads as âgoodâ because it indicates that a business has more promoters than detractors. You can choose between two main ways of doing it, depending on whether you want to ask in-the-moment feedback or collect it sometime after a customer has had an experience with your company. When youâre just getting started with NPS you donât need this level of depth: any information you collect at this point will help you start to paint a clear picture. They have one of the highest NPS in the industry (80 and above), and this NPS case study covers how using Net Promoter Score helped them secure repeat business, expand their product offerings, and grow at an impressive pace. T hey would not recommend you, and theyâre likely to leave bad reviews of your product or service. They chose the likelihood to recommend question based on the observation that it best predicted these customer behaviors in 11 of 14 industries studied. [18] They also allow that a survey using any other question can be used within the Net Promoter System, as long as it meets the criteria of sorting customers reliably into promoters, passives and detractors. NPS is calculated by subtracting the percentage of customers who answer the NPS question with a 6 or lower (known as âdetractorsâ) from the percentage of customers who answer with a 9 or 10 (known as âpromotersâ). Calculating your Net Promoter Score. [citation needed] Others, such as Dell or Intuit, claim that technology helps analyze the verbatim responses effectively. Net Promoter Score (or Net Promoter System) is a proven methodology for measuring customer loyalty through first-hand feedback. It is used as a proxy for gauging the customerâs overall satisfaction with a companyâs product or service and the customerâs loyalty to the brand. Companies with high a NPS are more likely to achieve long-term profitable growth. To grow your business, you need satisfied customers or âpromotersâ who talk about you enthusiastically and send referrals your wayâand the way you measure your promoters is by checking how many people scored you 9 and 10 in an NPS survey. After being presented with the standard NPS question, "On a scale from 0-10, How likely are you to recommend this company to a friend or colleague? "Net Promoter Score for Social Gaming," 28 February 2011. ", customers are classified into three groups depending on the score they picked. Out of four scales tested in two studies (the original LTR with neutral label, a 7-point version with neutral label, a 7-point fully labeled, and 5-point fully labeled), the 7-point scales were better than the 11-point scale advocated by Reichheld, with partly-labeled scale outperforming all others by a smaller margin in predicting stated historical recommendations . #1: The Standard Net Promoter Score Question. Honda Net Promoter Score Benchmarks: 24: American Express: Financial Services / Credit cards: https://www.americanexpress.com In addition, a good NPS survey will also ask follow-up questions to understand why, for example: These answers reveal both whatâs working for a companyâs most satisfied customers, and whatâs causing people to have negative experiencesâso the latter can be fixed and the situation improved. Net promoter score is a standard benchmark used by companies around the world. "[24], While several studies, such as one by Preston and Colman,[25] have shown that there is little statistical difference in reliability, validity, or discriminating power, an unpublished paper by Schneider et al (2008) found a more nuanced pattern. [3] Proponents also counter that analyses based on third-party data are inferior to those conducted by companies on their own customer sets, and that the practical benefits of the approach (short survey, simple concept to communicate, ability to follow up with customers) outweigh any statistical inferiority. In closing the loop, the provider actively intervenes to learn more from customers who have provided feedback, and also to change a negative perception, often converting a Detractor into a Promoter. For purposes of calculating a Net Promoter Score, Passives count toward the total number of respondents, thus decreasing the percentage of detractors and promoters and pushing the net score toward 0. NPS is a useful number for evaluating and benchmarking your business, but its real value is in the answers to the follow-up questions you get to ask as part of the survey: "Whatâs the main reason for your score? NPSâor net promoter scoreâis a measure of customer satisfaction that has developed a cultlike following among CEOs. The basic Net Promoter Score question that was created by Fred Reicheld and Bain&Company. Here are two examples and stories to get you inspired: Like a lot of our customers, we use Hotjar to track NPS. [5]:48–49, The primary objective of the Net Promoter Score methodology is to predict customer loyalty (as evidenced by repurchase and referral) to a product, service, brand, or company. Net Promoter Score (NPS) is calculated by asking customers one question: âOn a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?â Data from this question helps businesses improve upon service, support, delivery, etc. "[28] NPS questions are scored on a 0-10 and itâs important to remember that the Net Promoter Score (NPS) is not expressed as a percentage but as an integer lying between -100 and +100. [19], Some proponents of the Net Promoter Score suggest that the same methodology can be used to measure, evaluate and manage employee loyalty. [citation needed] Companies using the Net Promoter System often rely on software as a service vendors that offer a full suite of metrics, reporting, and analytics. NPS is a typical benchmark companies measure to evaluate and improve customer loyalty. The survey consists of one simple question: How likely is it that you would recommend the company to a friend? It was introduced by Reichheld in his 2003 Harvard Business Review article, "The One Number You Need to Grow". The scoring for this answer is most often based on a 0 to 10 scale. Scores vary substantially between industries, so a good score is simply one whose trend is better than that of competitors in the same industry, as measured by double-blind benchmark research. Sign up for a free forever Hotjar account, set up an NPS survey, and uncover insights that help you grow your business. Note that NPS can actually be negative if you have more detractors than promoters, which happens fairly often for large businesses. [23] Hayes (2008), "The True Test of Loyalty," Quality Progress, June 2008, 20–26. To calculate the net promoter score, you simply deduct the percentage of detractors from the percentage of promoters. The Temkin group study quoted earlier also found a high correlation between NPS and customer experience: on average, in the US âcustomer experience leaders enjoy an NPS that is 21 points higher than the NPS of customer experience laggards.â. In the Net Promoter system, average scores vary greatly between industries: Â. Net Promoter Score is a customer loyalty metric created by Fred Reicheld, Bain & Company and Satmetrix in 2003. The Net Promoter Score is The Net Promoter System begins with scores from customer surveys: On a scale of 0 to 10, how likely would you be to recommend this company (or this product) to friends and colleagues? "Furthermore, combining CFMs (customer feedback metrics), along with simultaneously investigating multiple dimensions of the customer relationship, improves â Read more about how to word your NPS survey questions. Itâs simple to calculate your final NPS score â just subtract the percentage of detractors from the percentage of promoters. For instance, NPS presumes that someo⦠for increased customer loyalty. [5]:49–51 They also found that differences in Net Promoter Scores among direct competitors in a market could explain substantial differences in revenue growth rates among competitors in that market. "…given the present state of evidence, it cannot be recommended to use the NPI as a predictor of growth nor financial performance."[29]. Passives (score of 7 or 8) are not actively recommending a brand, but are also unlikely to damage it with negative word of mouth. Net Promoter Score Calculation On the plus side, giving your customers the time to experience the product/service they received from you (for example, 15 or 30 days) might help them develop an even clearer sense of whether or not they would recommend it. However, both of these scores are highly unlikely in real life. We have been doing it for more than a year and learning as we go; in this article from 2018, we shared a few lessons about owning the metric, sending the NPS survey at the right time in the customer journey, segmenting the results, and closing the loop. Itâs seen by many as a better indicator of customer loyalty than traditional customer satisfaction surveys. ","What can we do to improve our business - and your score? The worst possible score - i.e., the score that would be achieved if every customer was a detractor, is -100. Respondents who provide a score of 7 or 8 are referred to as "passives" and do not enter into the overall percentage calculation. In the face of criticisms of the Net Promoter Score, the proponents of the Net Promoter approach claim that the statistical analyses presented prove only that the "recommend" question is of similar predictive power to other metrics, but fail to address its practical benefits, which are at the heart of the argument Reichheld put forth. A perfect score of 100 indicates that every survey respondent would recommend a company to someone elseâa score that, apparently, nobody has ever achieved. "Influence of the Net Promoter Score of Retailers on the Willingness of Consumers to Install Their Mobile App", "A Longitudinal Examination of Net Promoter and Firm Revenue Growth", "Optimal number of response categories in rating scales: reliability, validity, discriminating power, and respondent preferences", "Measuring Customer Satisfaction and Loyalty: Improving the 'Net-Promoter' Score", "The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Customer Retention, Recommendation, and Share-of-Wallet", "Nomological validity of the Net Promoter Index question", Performance Measurement: GE Asks The Ultimate Question, Official site of The Ultimate Question 2.0, https://en.wikipedia.org/w/index.php?title=Net_Promoter&oldid=998669852, Articles with unsourced statements from January 2019, Creative Commons Attribution-ShareAlike License, This page was last edited on 6 January 2021, at 13:46. Itâs crucial that you always close the loop with customers to understand the context and reasons behind their score. Top-notch companies generally have an NPS of 70 and above, but if youâre thinking this is the domain of big, global companies only, think again: in 2018, Netflix had an NPS of 64, PayPal scored 63, Amazon 54, Google 53, and Apple 49. The result of the calculation is expressed without the percentage sign. [4] Its popularity and broad use have been attributed to its simplicity and its openly available methodology. [4] The open-ended question is often a conditional one meaning that it only appears if the customer gives below a certain threshold, such as below 7 (detractor). Bain invented the Net Promoter Score and Net Promoter System to help companies earn customer loyalty and inspire employees. The Net Promoter Score Your Net Promoter Score is simply the percentage of promoters minus the percentage of detractors. Hereâs where industry NPS benchmarks like the ones mentioned above are useful: while an NPS score of -3 may seem bad in isolation, itâs hard to interpret it without comparable scores from key industry playersâif the industry average was -10, suddenly the score would not look as bad. Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc. NPS is a powerful and motivating metric that inspires action across businesses of all sizes. Ask follow-up questions as part of the standard NPS survey. For maximum value, you should always follow it up with one or two separate questions: Instead of presenting people with a website pop-up, you can collect NPS data by emailing customers and inviting them to fill in a survey after a purchase or key interaction with your business. What is sometimes called the "employee Net Promoter Score" or eNPS has been compared to other employee satisfaction metrics and some companies have claimed that it correlates well with those other metrics.[5]:165. By, Track and quantify a score over time, creating internal benchmarks, Rally all employees around one mission-critical objective: earning more enthusiastic customers. A score between 0 and 30 is a good range to be in, however, there is still room for progress. When your companyâs NPS is high (or, at least, higher than the industry average), you know that you have a healthy relationship with customers who are likely to act as evangelists for the brand, fuel word of mouth, and generate a positive growth cycle. Your Net Promoter Score can range from negative 100 to 100 ( -100 to +100). [7] Local office branch managers at Charles Schwab Corporation, for example, call back customers to engage them in a discussion about the feedback they provided through the NPS survey process, solve problems, and learn more so they can coach account representatives. Net Promoter Score (NPS) survey consists of a single question that measures the likelihood of your customers referring your business to their others. The overall NPS system is important because it allows businesses to: Â, â Read more about the essential components of the Net Promoter System. In this 2015 video, Rob Markey , a Partner in Bain & Companyâs New York office, describes the Net Promoter Score and the Net Promoter System . If they pick a 9 or 10 (promoters), follow up with enthusiasm and investigate further by asking âWhatâs the main reason for your score?â. Generally speaking, a Net Promoter Score that is below 0 would be an indication that your business has a lot of issues to address. It helps companies organize around the mission-critical objective of earning more enthusiastic customers, and the score itself can be easily tracked and quantified over time. Net promoter score (NPS) definition NPS stands for Net Promoter Score which is a metric used in customer experience programs. Use of multiple indicators instead of a single predictor model performs significantly better in predicting customer recommendations and retention. Once you have an understanding of how NPS changes over time, you can investigate what factors may have contributed to itâwhich is when the next point comes in handy. These powerful tools can help you earn the passionate loyalty of your customers while inspiring the energy, enthusiasm and creativity of your employees. For a time basis, asking your customer base every quarter is a good way to gauge how your product and brand is performing over time. It is an indicator of customer experience, customer satisfaction, and brand loyalty. Net Promoter or Net Promoter Score (NPS) is the percentage of customers rating their likelihood to recommend a company, a product, or a service to a friend or colleague as 9 or 10 ("promoters") minus the percentage rating this at 6 or below ("detractors") on a scale from 0 to 10. "Would You Recommend Us?" If the customer picks a number between 0 and 8 (detractors - passives), apologize for the negative experience and ask âWhat can we do to improve your score?