Net Promoter Score Analysis | What is Net Promoter Score?

Net Promoter Score Analysis | What is Net Promoter Score?

By: Answerout


What is Net Promoter Score?

Net Promoter Score, or NPS, is a metric used to measure customer satisfaction and loyalty. It does so by asking customers how likely they are to recommend the company’s products and/or services to others. This question is followed by a 0 to 10 scale, 0 being the least likely to recommend their products/services and 10 being the most likely. [caption id="attachment_86178" align="aligncenter" width="438"]Net Promoter Score Analysis, What is Net Promoter Score? Net Promoter Score Analysis, What is Net Promoter Score?[/caption]

Types of Respondents of an NPS Survey

Respondents are categorised into the following three groups based on the score they chose in the NPS survey:

Promoters: Score of 9 or 10

Promoters are highly satisfied customers who choose a score of 9 or 10. They are very happy with their experience with your company and may share their positive experiences with others, drawing in new customers to try your products and/or services.

Passives: Score of 7 or 8

Passives are respondents who choose a 7 or 8 on the NPS survey. They aren’t particularly happy or disappointed with customer experience, and are therefore indifferent toward your company. Passives don’t have any kind of effect on your brand image, neither positive nor negative.

Demoters: Score between 0 and 6

Demoters are respondents who choose a score between 0 and 6. They are dissatisfied customers that can be harmful to your brand image as they may share their negative experiences with others, dissuading new potential customers from trying your products/services.

NPS Formula

Once respondents are categorized, the following formula may be used to calculate your NPS score: NPS Score = % of Promoters - % of Detractors This is the formula which is majorly used by most of the NPS Calculators available. NPS scores are always expressed as a value between -100 and +100, where a negative score indicates having more detractors than promoters and a positive score indicates the opposite.

Analysing NPS Score Results

There are two ways in which an NPS score can be analysed: the absolute method and the relative method.

1.   Absolute Method

With the absolute method of interpreting an NPS score, any positive score is considered a good score as it means that the company has more promoters than demoters. Any negative score is considered to be bad as it indicates that the company has more detractors than promoters.

2.   Relative Method

The relative method evaluates the NPS score based on industry standard. Therefore if a company has an NPS score of 60 while the industry standard is 55, then they have a good NPS score. However, if the industry standard is 65, while they have a score of 60, then their NPS is below industry standard and is therefore bad.

How can you Improve your NPS Score?

Although NPS surveys can help you understand the levels and trends of customer loyalty, it won't tell you what is causing these numbers and trends. Without understanding why your NPS score is what it is, you can’t know what measures to take to improve it. Therefore, it comes to question: how can meaningful and valuable insights be drawn from NPS surveys? [caption id="attachment_86179" align="aligncenter" width="267"]How can you Improve your NPS Score? How can you Improve your NPS Score?[/caption] This can be done by using NPS in amalgamation with other customer satisfaction metrics, so that you can get a more holistic picture of your customer base. For instance, by charting NPS scores against CSAT (Customer Satisfaction) Scores, you can segment your customers in order to identify which project investment could give you more returns. This provides you with an objective hypothesis of what drives customer loyalty and the ways in which you can improve it. These layered scores can be used to categorize respondents into the following four categories:  Advocates Respondents who have scored you well on CSAT and NPS surveys.  Promoters with Bad Service Experience Respondents who gave you a high NPS rating but a low customer satisfaction rating.  Wildcards Respondents who gave you a high customer satisfaction rating but a low NPS rating.  Wasteland of Lost Customers Customers who rated you badly on both, your CSAT survey and your NPS survey.

Advocates

Advocates are loyal customers who also had great experiences with your customer support team. These customers can be sent to the marketing team for testimonials and can be encouraged to give referrals. As advocates are loyal customers who are also satisfied, they are more satisfied than promoters.

Promoters with Bad Service Experience

By comparing NPS and customer satisfaction scores, you are able to see whether customer support is driving loyalty or if it's causing customer attrition.

Wildcards

This section of respondents is satisfied but still disloyal to your brand. These customers are likely to have had a bad experience with your brand in the past, and have still not overcome their reservations against your company. They are at high risk of churn as they either have a high level of product frustration or they don’t see enough value to stay. These customers need to be kept engaged, either through education or product fixes.

Wasteland of Lost Customers

These customers are neither loyal, nor satisfied. This segment is often not targeted by businesses, as it has less potential for returns as these customers are already very unsatisfied.

Using Segments to T arget Customers

The aforementioned groups further categorize respondents, allowing each group to be targeted separately. By doing so, more and more customers can be turned into advocates who help you grow your brand. For example, Wildcards can be targeted through increased surveying or customer interviews.

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