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Net Promoter Score =
Proportion of Detractor Scores - Proportion of Promoter Scores
Net Promoter Score Definition
Net Promoter Score or NPS® is a measure of a customer base’s willingness to promote a product or service to colleagues and friends. It is based on the results of a current customer survey, which asks respondents to answer the following question: (on a scale of 1-10) “how likely is it that you would recommend (brand or product X) to a friend or colleague?” (10 being ‘extremely likely’ and 1 being ‘not likely at all’)? Responses are grouped as follows: 10s and 9s are brand ‘Promoters’, 8s and 7s are ‘Neutrals’, and any responses below 7 are brand ‘Detractors’.
NPS has grown to be an incredibly popular metric among marketing and customer support departments, valued for its simplicity and for its focus on customer satisfaction and loyalty as the prime measures of organizational performance. NPS can be an especially important metric to organizations focused on growth through account expansion or referrals - the “Viral Engine of Growth” in Eric Ries’ terms.
Net Promoter Score Example
- Detractors: 6 (4.8%)
- Neutrals: 64 (51.2%)
- Promoters: 55 (44%)
- Total: 125 (100%)
Net Promoter Score = 44% - 4.8% = 39.2
Here’s two samples of NPS Klips we’re experimenting with at Klipfolio (A ‘Klip’ is our term for a visualization that places data in context and delivers business insights):
Net Promoter Score Benchmarks
There are many online resources to provide your company with a NPS benchmark. Net Promoter Network provides the following list of Average NPS by Industry:
- Department & Specialty Stores: 58
- Brokerage & Investments: 45
- Table Computers: 44
- Smartphones: 40
- Software & Apps: 19
- Health Insurance: 12
- Cable/ Satellite TV Service: 3
- Internet Service: -3
Not listed? Not a problem! Search the Net Promoter Score benchmark for your company, tag or industry on NPS Benchmarks.
Net Promoter Score Challenges
Absent a plan to monitor and act on information obtained through net promoter scoring, NPS is useless and you’ve disrupted your customer base for no good reason.
Net Promoter Score Best Practices
Net promoter scoring should start by answering two related questions: (1) why are we asking? and (2) what will we do with this information? Most organizations will use an initial NPS survey as a benchmark, and track subsequent NPS surveys to measure ebbs and flows in customer sentiment over time. Having clear visibility into changes in NPS over time enables action when customer satisfaction/loyalty drops significantly. A climbing NPS score is an indication that customer experiences are improving, so you should keep doing what you’re doing.
Perhaps the best insights and the most powerful benefits of net promoter scoring come when you combine NPS with related KPIs such as Customer Retention Rate and Customer Referral Rate. If NPS has been falling for the past two quarters, you should expect to see a climb in customer churn and a reduction in account expansions and referrals. On the other hand, as NPS climbs, you would expect to see rising customer referral, retention and expansion rates. Measuring the relationships between these metrics can help optimize performance over time.
How to Monitor Net Promoter Score in Real-time
Once you have established benchmarks and targets for measuring Net Promoter Score, you’ll want to establish processes for monitoring this and other marketing KPIs. Dashboards can be critical in this regard.
Learn more about how to track your Net Promoter Score on a Digital Marketing Dashboard.
Net Promoter Score: Top Resources
Net Promoter Score(NPS)-a balanced view, Customer Champions
Why NPS is a growth-focused KPI, Christian Reni