There's no doubt that word of mouth (positive and negative) is a big part of the reason that customer satisfaction links to business performance, and Net Promoter Score (NPS) taps into that mechanism. Here we look at a definition of NPS and how we can help your organisation measure it effectively.

What is NPS?

Ideally every business wants more customers saying good things about them (recommending them) than saying bad things and actively putting potential customers off.

NPS or Net Promoter Score is a customer experience metric that organisations use to measure how they are perceived by their customers and whether they would recommend them to others.

NPS allows you to identify the customers who are more likely to positively influence other people’s opinions (Promoters) and those who are more likely to warn others about problems and issues they have faced while dealing with you (Detractors).

Measuring a Net Promoter Score is usually based on a single question. An example would be:

Respondents give a rating on scale of 1 (very unlikely) to 10 (very likely) and depending on their response fall into 1 of 3 categories: 9 & 10 = Promoters, 7 & 8 = Passives and 1-6 = Detractors.

To calculate your final NPS score, simply subtract the percentage of Detractors from the percentage of Promoters. For example, if 10% of respondents are Detractors, 25% are Passives and 65% are Promoters, your NPS score would be 65-10 = 55.

Below are some examples of NPS scores, and how the score can vary when the percentage of Promoters and Detractors changes.

Uses for NPS

Any positive Net Promoter Score means there are more customers acting positively, than negatively. NPS tells you about the balance between these types of behaviour.

We say an NPS of 30% is fairly good, but this depends on what makes up the score. It is always useful to look at your Promoters and Detractor scores in more detail, and not rely entirely on the NPS.

Approaching NPS for segments within a business

Firstly, look at the relative differences between departments and any big changes over time. Don’t concentrate on small variations; look on a general level to see if there is anything to investigate more thoroughly and also the negative scores, as they may pinpoint any real areas of concern.

Your aim is to increase NPS scores. You may wish to aim for all departments hitting a pre-determined score, or you may simply aim to continually improve your NPS.

What are the Pros and Cons of NPS?

Pros:

• NPS is very popular. NPS survey scores are widely used across most industries, which makes it easy to understand and even easier to benchmark.

• It’s very simple. You can obtain a broad understanding of customer sentiment with only one question.

Cons

• NPS is based on the response to one question and can fluctuate over time.

• You need a robust sample size up to track NPS effectively. This is worth remembering if your sample size is fairly small, or if you are comparing parts of the business with differing sample sizes.

• NPS does not tell you how to increase customer satisfaction. It will alert to you to changes in satisfaction, but will not help you understand what is causing them.