The Net Promoter Score (NPS) is widely used by many of the world’s global market leaders to measure where they stand with their customers. At first glance, NPS is relatively straightforward — customers are either satisfied or they aren’t. But examined closely alongside other customer experience metrics, NPS can unlock significant actionable insight.
Our “What’s That Stat?” series explores some of the most important customer experience (CX) metrics and what they mean for you and your customers. Learn more about how examining NPS can help you target ways to improve customer experience.
What is NPS?
In the simplest terms, NPS shows a company the percentage of customers who would recommend the company to people they know. You’ve no doubt responded to some NPS surveys yourself.
Typically, these queries include variations of the question, “How likely are you to recommend this company (or product or service) to a friend (or coworker or family member)?” Usually, marketing analytics collects NPS responses using a scale of 0 to 10 at various points in the customer journey. Low scores equate with poor CX and high scores signal exceptional CX.
NPS is popular partly because of its simplicity. Customers can answer quickly and companies can easily track and understand their responses. Brands that use NPS often use it to establish benchmarks, create employee incentives, predict future gains or losses, and hone strategies like word-of-mouth marketing.
How to Calculate NPS
Calculating NPS involves categorizing respondents into three groups:
- Promoters (score 9-10) are loyal brand enthusiasts most likely to return and refer new leads.
- Passives (score 7-8) are customers who feel “ok” about a brand, but who are somewhat vulnerable to competitive messaging.
- Detractors (score 0-6) are unsatisfied customers. They are not only vulnerable to competitor offerings but may actually damage your brand through harmful word-of-mouth activities like creating poor online reviews or making negative social media posts.
To determine NPS, you’ll need to calculate each category’s percentages by dividing the number of responses in each category by the total number of responses you received. You can then subtract the percentage of detractors from the percentage of promoters. The result is your NPS score.
An ideal overall NPS goal is a positive percentage where you have mostly promoters and some passives, but few detractors.
The Limitations of NPS
NPS helps measure overall customer perception, but it’s important to understand the limitations of this metric.
Often, companies zero in on NPS and focus only on how the metric moves up and down. This is not surprising. Research, such as this London School of Economics study, indicates that an average NPS increase of 7 percent correlates with roughly one percent growth in revenue.
Sometimes, companies have an outsized response to a falling NPS, establishing committees to get to the bottom of the issue and holding emergency meetings. Panic can set in. However, considering NPS in a vacuum does not offer much in the way of usable insight.
While NPS is powerful in its simplicity, it is, in fact, a simple metric. You’re gaining information about how a customer felt at a precise moment in time, but little information about why they felt that way.
To this end, it’s vital to examine NPS in relation to other key CX metrics. It can be especially insightful to consider NPS in the context of Customer Satisfaction (CSAT), Customer Effort Score (CES), and Average Time Resolution (ATR).
Here’s a quick refresher on what these metrics measure, taken from other articles in our “What’s That Stat?” series:
- CSAT measures how products, services and customer experiences meet or exceed customer expectations.
- CES is a CX survey metric that allows companies to analyze the ease of customer interactions and resolutions during a request.
You’ll gain much more helpful, actionable insight when you pair NPS with these other metrics to get a better understanding of why customers fell into detractor, passive, or promoter NPS categories.
Improving NPS with Positive Customer Experiences
Each of these metrics (NPS, CSAT, and CES can be boosted through positive customer experiences. Investments in enhancing client relations, improving contact center operations, and reducing customer journey frustrations all lead to better CX and improved NPS.
Boost NPS with Callback Services
Long hold times are frustrating for callers and call center agents. They can drive down NPS and affect agent performance and job satisfaction. Learn more about how VHT’s Mindful platform, including Text Notification services, can boost CX metrics and improve NPS in as little as a few days.