Find out what NPS is and why it’s key for your business

Find out what NPS is and why it’s key for your business

Customer satisfaction is the goal of any business, but how do you measure this effectively? Learn about NPS and how to apply this methodology to your business.

Many companies have difficulties in finding out which strategies are the most efficient to increase sales, build customer loyalty, or expand their business.

One way to find out what steps to take in order to make sure your business is more competitive is to measure the level of customer satisfaction. After all, this is your gauge to know how your business is doing in the market.

Several techniques measure the audience’s satisfaction, and the most recommended is the Net Promoter Score or simply, NPS. Are you interested in learning more about this method? Then keep reading!

What is NPS? 

Fred Reichheld invented this satisfaction survey methodology in 2003, in the article, “The one number you need to grow”, for the Harvard Business Review.

This article gave rise to the book, “The Ultimate Question”, in which the Brain & Company consultant was able to better detail his ideas about this methodology.

Since then, the NPS is used to optimize processes and offer products and services that are better in line with consumer tastes and preferences. And, with this, improve customer service.

Therefore, the Net Promoter Score is a methodology that measures consumer loyalty levels from one question, whose answer is given on a scale between 0 and 10.

It can be applied to different business segments while maintaining the reliability of its results.

Why use the Net Promoter Score?

And no wonder it’s widely used. Its popularity and recurrence can be explained mainly due to the four items below.

Easy to use

NPS is not limited to market niche, company size or types of audience. Any business can use this methodology.

Moreover, it can be used to measure customer satisfaction during the entire purchase journey, from the initial contacts to the post-sales.

More reliable results

And these easy-to-use features don’t mean that the results are suspect or easily manipulated, quite the contrary.

Since NPS consists of only questions, the chances of customers being manipulated by the order of the questions or by the wording are much slimmer. 

Adaptable to any business

The Net Promoter Score can be applied to many different types of business, as mentioned here.

By maintaining methodologies and question bases, it’s easy to vary situations and ways to approach your consumer.

Questions like, “How likely are you to recommend our company to other people?” or “On a scale from 0 to 10, would you recommend this brand to a friend?” are the most common and can be used in various scenarios.

A good way of breaking down these questions is asking the reason for the rating. This can  provide a broader feedback to help you analyze their level of loyalty or even understand why you have dissatisfied customers.

Allows comparisons with other companies

With the NPS, which is increasingly used, you can compare your results with those of other businesses, serving as material for benchmarking.

With information from other businesses, you’ll be able to know what each one is doing right and wrong, besides finding possible paths to increase your audience’s satisfaction.

How does NPS work?

After learning about NPS and its benefits, it’s time to learn how it works in practice, right?

The first step to applying this methodology is knowing which questions to ask. In other words, how you want to find out your customers’ level of loyalty.

If your business has different audiences, you’ll need to segment it to decide which ones will be evaluated.

Afterwards, you need to choose the point of contact. In other words, the moment in the consumer’s journey when the question will be made, such as the closing of the first purchase or after support service is provided, for example.

This choice can also be made through other channels, such as email marketing, text message blasts or pop-ups on your website, for example.

But, this option should always have your customers’ adherence.

As you’ve seen, these questions will be answered with numbers. In other words, your prospects will give a score between 0 and 10 to show their level of satisfaction.

Therefore, the question must be related to it. Afterwards, you can ask them to explain their answer further, providing a more complete breakdown for your survey.

The survey’s frequency doesn’t have to be limited, but the analysis of results must be performed frequently.

In this case, this frequency must be applied according to the nature of your business and the steps you wish to take in your growth strategy.

How are customers classified? 

According to the answer given, each customer can be classified in 3 different categories:

Promoters 

These customers are those who give you the highest scores, between 9 and 10. In other words, this indicates that the strategy you’ve been using in your business is working. They feel close to your brand and always recommend it!

This also means that these customers’ loyalty isn’t based only during purchases, but they are also willing to answer other questions in surveys, giving constructive feedback. 

Your business should focus on this type of customer in order to get more from them. Therefore, they are the ones that show you what works regarding your brand, and the ones who recommend it to other people. Therefore, it is critical that you maintain a good relationship with these customers.

Neutral 

Satisfied, but not as loyal, neutral customers are those who give you scores between 7 and 8. They recommend you with certain reservations.

These customers are those who only buy when they need something, and you shouldn’t expect them to recommend you to their friends.

They also indicate that your business might not be the only choice they have, and that they might also consider your competitors’ product or service.

It is critical that you try to win these customers over. Therefore, you must ask for feedback, even if they don’t give you any.

Detractors 

These customers give you scores between 0 and 6. Therefore, odds are there’s no chance that this type of customer will recommend you to anyone. 

In general, your brand’s service or product has disrupted their life at some point. They had to search for other possibilities and will certainly bad-mouth your business to other people. 

How to calculate your business’ Net Promoter Score

You’re probably wondering, “Well, I have my NPS results here. Now what do I do with them?”

It’s time to find out. 

The first thing you need to keep in mind is that the result varies between -100 and 100. 

And you reach a result by considering the number of promoter and detractor customers (neutral customers are not taken into consideration).

In order to make the explanation easier, let’s say that you have received 10 replies. Three of them with scores between 9 and 10 (i.e., promoters). Four between 7 and 8 (i.e., neutral). And the other three replies are formed by detractors, who gave you a maximum score of 6.

Therefore, we have 30% of promoters and 30% of detractors.

You must subtract the percentage of detractor customers from the percentage of promoter customers.

In our example, we have:

% of promoters – % of detractors = NPS

30% – 30% = NPS

0.3 – 0.3 = 0

In other words, in our example, the NPS is equal to 0.

This score demonstrates an obvious neutral audience opinion, which might mean that you need to improve your communication and customer service strategies. 

In short, you can interpret the scores as follows:

  • Between -100 and 0: Critical zone. The rate of detractors is very high, which shows that your business needs to improve customer experience and you should be concerned about your image and the image of your products and services.
  • Between 1 and 50: Improvement zone. Neutral and detractor customers are the majority and you need to improve your campaigns further.
  • Between 51 and 75: Quality zone. This means that you have a good number of promoters. You need to use them to reduce the number of neutral and detractor customers.
  • Between 76 and 100: Perfect zone. This is the dream, right? Very few detractors, so use this loyalty and expand your business.

Use your NPS results and make your business grow

Therefore, the NPS is a great way of analyzing how your customers’ loyalty is doing.

Whatever your NPS results might be, it will show you the direction your business needs to take in order to expand and create new ways of prospecting customers.

Even if the score is low, this is a sign that there are possibilities for growth. All you need is to make the right decisions to make it higher.

Want to know 7 common mistakes you should avoid when it comes to customer service? Read this article and make your business move ahead with intelligence and quality!

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