How to measure your Net Promoter Score

How to measure your Net Promoter Score

Opinion ·

Marketing experts worldwide have agreed that the Net Promoter Score is a gold standard for brands trying to increase their customer experience value. The NPS is measured by asking questions that produce a vivid measure of the brand’s image and performance from its customer’s perspective.

A study by Bain reported that businesses that achieve long-term profitable revenue growth have a Net Promoter Score two times higher than the average company. These businesses grow at more than twice the rate of their competitors.

So, what is the Net Promoter Score, and how can one achieve a high score? Let’s find out!

What is the Net Promoter Score (NPS)?

The Net Promoter Score (NPS) can be defined as customer loyalty and satisfaction measurement that is evaluated by asking customers how likely they are to recommend the brand’s products and services to their friends.

NPS is widely used in customer experience programs to gauge customers’ loyalty, satisfaction, and enthusiasm for purchasing from the brand. It measures the customer’s reliance on the business and determines how positively or negatively the customer perceives the brand.

The Net Promoter Score (NPS) was first developed by Bain and Company in 2003 and is now used by billions of businesses globally to track customer engagement. In fact, as a key business metric, __NPS can help companies of all sizes follow a mission-critical goal: increase customer loyalty and earn devoted customers. __

The NPS is an index ranging from -100 to 100 that attempts to measure the willingness of customers to recommend the company’s products and services to others. It is believed that when customers enjoy a brand’s products and are impressed with their customer service, they are likely to talk about it with their friends. A study showed that more than 72 percent of customers are presumably keen on sharing a positive customer experience with at least six or more people. This is where the Net Promoter Score comes in.

5 Reasons why it is important to measure the Net Promoter Score

While there are several metrics one can use to assess the performance of their business, the Net Promoter Score (NPS) remains crucial. Here’s why:

It helps you to increase customer satisfaction.

The Net Promoter Score (NPS) allows businesses to gauge how satisfied/happy customers are with the services they offer. As a brand, your goal should be to make most of its customers happy, and measuring NPS makes this possible. If your NPS score reveals that the satisfaction is not what you want it to be, you can take steps to improve it.

It gives your team a common goal.

A study by Gallup in 2017 revealed that more than 67 percent of US employees felt they were not actively engaged in their jobs. This can be a significant concern for the management, especially businesses that want to increase their revenue.

An excellent way to keep your employees engaged is by giving them a clear goal to focus on. The team can be encouraged to increase the NPS score and prioritize customer satisfaction by introducing NPS. Your team will work together closely and ensure no dissatisfied customer walks away. As a result, the churn rate will decrease, and sales will increase.

It quantifies word-of-mouth marketing.

A significant feature of NPS is that it measures word-of-mouth marketing, which is crucial for constant growth. More than 92 percent of consumers trust their friends and family’s recommendation over other forms of advertising, and this is a huge percentage that can be quantified into loyal customers.

What comes with loyal customers are loyal advocates for the brand. Measuring your NPS, helps you to understand how to increase customer advocates.

It decreases the customer churn rate.

All brands have a common vision: to reduce customer churn and increase revenue and sales. Your loyal customers or promoters are less likely to churn. Therefore, measuring your Net Promoter Score can help you invest more resources and efforts into curating an unforgettable customer experience. The higher the Net Promoter Score, the lower the customer churn rate.

It identifies areas for product improvement.

Your customers know your products and services inside-out because they are the ones who use them. When you create a product for your brand, collecting customer feedback is critical. A company’s NPS readout is an invaluable source for detecting areas that need improvement.

If you get a bad NPS score, you can understand why your customers would not promote it and make efforts to fix that. Thus, NPS can be effectively used to gather customer responses related to the products and services and use that data to improve your product roadmap.

How to measure the Net Promoter Score

The NPS calculating formula is relatively simple. Customers are surveyed on one single question. The customers are asked to rate on a 11-point scale how likely they are to recommend your brand’s products and services to a colleague or a friend.

The question can be framed as:

__“On a scale of 0 to 10, how likely are you to recommend our brand’s products and services to your friends and family?” __

Now, based on the rating, the customers are segmented into three categories:

Detractors: They are the ones who score between 0 to 6. Detractors are not thrilled by your brand or the products and are generally dissatisfied and unlikely to purchase from the brand again. Detractors could also potentially damage the company’s reputation by spreading negative word-of-mouth feedback.

Passives: They score 7 or 8 because they are somewhat satisfied with your brand. However, passives can easily switch to another competitor’s offering if given the ideal opportunity. Passives don’t spread negative word-of-mouth but aren’t enthusiastic about actively promoting your products.

Promoters: They score between 9 to 10 and are loyal customers. They love your brand’s products and services, are repeat buyers, and would enthusiastically advocate or refer to their friends.

InText-NPSformula

To calculate the Net Promoter Score, the percentage of detractors is subtracted from the percentage of promoters. The generated score is usually between -100 to 100. Thus, if all the surveyed customers give a score lower or equal to 6, it would lead to an NPS of -100. And, if the surveyed customers give a score between 9 to 10, it would lead to an NPS of 100.

According to Bain and Company, an NPS score above 50 is excellent, and above 80 is considered world-class. The leading companies usually have an NPS of above 70.

It is important to remember that while you can increase your NPS score, achieving a perfect score of 100 is practically impossible.

Tips to improve the Net Promoter Score

A survey by LSE showed that an average NPS increase of 7 percent could translate into an average of 1 percent growth in revenue. Here are some tips that can help you improve your Net Promoter Score:

Focus on delivering an overall better customer experience

Customer-centric brands tend to have a higher NPS compared to others. Thus, if you want to increase your NPS, improve your brand’s customer experience. The first step is identifying customer needs and knowing what your customers want. Then, try to understand the customer journey and attempt to provide consistent service across all the touchpoints.

Work on customer feedback

Analyzing customer feedback is not the end goal, and feedback is only effective when it is scrutinized and implemented to improve your brand. Customers are often curious to know whether their feedback is valuable or not. The best way to resolve their curiosity is by listening to their advice and aligning efforts to improve their customer experience.

Close the loop with your customers

The Net Promoter System encourages brands to close the loop with their customers and dig deeper into their scores to understand the context. Methods such as follow-up emails, telephonic interviews, customer surveys, etc., can be used to better understand the NPS’s determinants and focus your efforts in a customer-centric direction.

Thus, whenever a poor rating shows up, try to reach out to the customer, understand their grievances, and fix the solution.

Segment your audience before planning efforts

Different audiences have different expectations. By segmenting your audience according to revenue, demographics, products, etc., you can create tailor-made solutions for each. This will increase the NPS rating.

Once your customers are segmented, you can focus on value proposition and align efforts with sales and marketing to address their needs and match their expectations.

Hold meetings with your team to talk about NPS

Improving the NPS of a brand is every employee’s collective responsibility. Short, interactive meetings with the team can reaffirm everyone’s commitment to providing high-quality customer service. It also provides a platform for employees to interact and discuss efforts.

How Layerise can help in increasing your Net Promoter Score?

If you are looking for a comprehensive tool to increase your Net Promoter Score, Layerise is the perfect solution for you. Layerise provides an in-depth view of customers based on their demographic and behavioral preferences. This allows brands to understand their customers' actions, track their satisfaction, and achieve a higher NPS.

With Layerise, you can not only increase your NPS but also tweak your campaigns to serve a wider audience. By collecting valuable feedback and product ratings from your customers, your brand can increase its customer loyalty to drive revenue.

If you want to learn more about how Layerise can help your business, book a free demo now!

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