What Is the Net Promoter Score?
You are only as good as your reputation. This is true in just about every facet of life, but it is particularly important in the business world. That’s why every business should know exactly where it stands with its customers -- the future of your company could depend on it.
But how do you determine just how happy your customers are? The best way to find out is to just ask them. OK, great, but how do you know how to interpret their responses?
The answer: a net promoter score (NPS). This score gives you a relatively objective measurement of how you’re performing in the eyes of your customers, and therefore whether you’re doing well or must fundamentally change as a company.
A good net promoter score is key not just for customer retention but also for finding new customers. Let’s dive into what a net promoter score is, how to calculate it, and how to improve it.
Overview: What is the net promoter score?
A net promoter score is a formula that determines just how likely customers are to recommend your product or service -- or even your company -- to their friends, family, or co-workers. The purpose of the NPS is to measure customer experience and forecast business growth.
The NPS relies on customer feedback. This feedback allows a company to determine where its strengths are and helps identify areas of improvement. A low NPS indicates the company has a lot of work to do to fix its products or its company image, whereas a high score shows that it is doing a good job and should continue to operate in the way it has been.
How to calculate your net promoter score
Calculating the NPS is simple and involves just two key metrics: detractors and promoters. A company sends out an NPS survey to customers asking them to rate on a 10-point scale (0-10) how likely they are to recommend their product or service to another person.
Consumers who rank the company badly (0-6) are called detractors, those who are in the 7-8 range are passives, and the high-rankers (9-10) are called promoters. Your NPS is determined by subtracting the percent of detractors from the promoters. This generates a score of between -100 and +100.
So, for example, if 5% of customers choose a number between 0-6, making them detractors, and 45% give you a 9 or 10, making them promoters (the remaining 50% falling in the 7-8 “passives” range), you would subtract 5 from 45 to get an NPS calculation of +40.
This would be a solid net promoter score, but it indicates the company has room for improvement. Perhaps the product needs more features, or your help desk has a large ticket backlog resulting in customer service delays that cause some would-be promoters to become passives. Or, perhaps you need a customer success manager to handle conflict resolution and turn those detractors into at least passives, if not promoters.
What can you do with the net promoter score?
An NPS gives you excellent insight into how your customers view you and whether you should improve customer care. Conduct a thorough analysis of NPS scores to further isolate customer segments and generate more insights on which types of customers are rating you higher than others. Don’t ignore the passives -- figure out what you must do to convert them into promoters.
Also, perform a cost analysis on robust promoters to see what it takes to get these particularly valuable customers. Using this information, you will be able to come up with a solid future strategy and determine what tactics it will take to achieve your sales goals based on a better understanding of customer needs.
How to improve your net promoter score for your business
Improving your NPS takes a lot of hard work, but it can be done -- and it’s a must if you hope to grow in the future. Here are some concrete steps you can take to boost your NPS.
1. Engage your team
The first step is to get your team on board. Talk to them about why it’s important to achieve a good NPS score and rally them around collective efforts to boost this score. Invest in the training needed based on your research, such as better customer service skills or improvement in product development. Monitor how engaged your team is and provide them with the proper incentives.
2. Make it personal
Social media gives you excellent access to your customers, so use it to directly engage with them and harvest feedback. Focus on cutting down on negative experiences because customers are typically more vocal about those than they are about OK ones.
Avoid paid reviews since these can backfire if you’re exposed, and it’s just not good practice in the business world. Use contests and promotions to incentivize customers to formulate more positive experiences with your brand.
3. Value your promoters
Your promoters are your brand ambassadors, so focus more attention on them than on your detractors. Most detractors will move on after one bad experience, and you’ll never hear from them again, but promoters will keep coming back and will talk about your company to others.
So keep a dialogue going with those promoters. Find out why they have been loyal to you. Ask them in what ways you could improve. Seek specific feedback rather than vague, general praise. And don’t shy away from constructive criticism -- this type of feedback can provide the greatest insights of all.
4. Consult with your detractors
Although your promoters should get most of the focus, don’t completely neglect the detractors because they have valuable information as well. Ask them what was negative about their experiences.
Don’t be afraid to engage -- they might even convert to future promoters if you handle it correctly and try to make the situation right. Even if they don’t come back, use them as a valuable learning experience and take a lesson from each.
Be willing to invest time in improving the customer experience. However, don’t focus too much on outliers with nothing but negative things to say, most of which aren’t reflected by other detractors. Some people just like to complain and should be ignored.
5. Be consistent and vigilant
In the business world, you must be willing to adapt, and net promoter scores are an excellent way to do that. Complacency is often fatal when it comes to boosting and maintaining your NPS, so engage with both team members and customers constantly to determine how you can improve your score, even if it’s good. Check the score regularly, assess weaknesses, and determine a proper response.
Most of all, stay flexible. If you’re committed to doing something, but the customers are telling you something else, it is you who must change, not them.
Software will boost your NPS
Another often-overlooked way to improve your relationship with customers is software. It's not intuitive, but the truth is that software will make you more organized and responsive to customers, and good customer service will ultimately improve your overall customer satisfaction. These platforms can also track other customer service metrics, and this valuable data will give you more insights.
The Ascent has reviewed some of the top customer service software options, describing in detail how they work and what features they provide. Check out some reviews and give a few software options a try to see if they might help your business do a better job of pleasing customers.
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