What exactly is a NPS?
The Net Promoter Score a simple, yet extremely powerful business metric. Your NPS can give you a magnitude of information about your current clients and how to improve your overall customer relations as well as gauging your business’ growth potential.
How do you collect NPS data?
When collecting your NPS data, you should also gather additional respondent demographic information if you do not already have such data stored in your CRM system. This data should include the respondent's position in the company, the company they work for, and their influence on the decision making process towards your product or service. Surveying the right population is one of the most important factors in collecting a relevant NPS score. This is because you need data from relevant sources who have an impact on your business. Further, regularly sending out NPS surveys can help to measure campaign effectiveness and continuously improve your customer relations.
NPS scores are more relevant in certain industries. They are the most impactful for businesses operating in highly competitive markets or industries where reviews and word of mouth recommendations have a large influence on customer decision making.
Now you have your NPS data, how do you calculate your score?
Before you can start analysing your NPS and acting on it, the first step is to calculate your NPS.
The NPS is calculated as the difference between the percentage of detractors and promoters. Therefore, the result of the calculation will be an absolute number between -100 and +100 and will not be a percentage. To complete the calculation you will first have to calculate the percentage of detractors and promoters by taking the number of detractors or promoters, dividing it by the total number of respondents and multiplying the result by 100. See the table below for an example.
|Respondent||Number of Respondents||Percentage|
What to do now you have your score?
Now it’s time to interpret the data. Usually, a NPS score above 0 is considered good. Anything below 0 means there are more detractors than promoters in your business and indicates a significant problem.
Your NPS data can help you to:
- Track customer behaviour
- Trends over time
- The impact of new products or decisions
NPS in the ‘real world’
Most large companies are already tracking their NPS data. Some notable businesses that have extremely high NPS scores are Netfilx with 68, Tesla with 96, and Airbnb with 74. These companies are all relatively new and have experienced major growth and success since their start. The high NPS scores of these businesses further cements their success and the validity of the NPS as a growth and success metric.
Learn more about ways to evolve your customer service and improve your NPS.