What is Net Promoter Score?

Article topics

1. What is Net Promoter Score?
2. What can I do with the data that Net Promoter Score identifies?
3. Where can I use Net Promoter Score?
4. What are the advantages of Net Promoter Score?
5. What are the disadvantages of Net Promoter Score?
6. Is Net Promoter Score right for my business?

Do you want to measure the customer experience and see which customers are the most loyal to your brand?

If the answer is yes, determining your Net Promoter Score (NPS) might be the easiest and most effective way to transform the way you do business.

Let’s look at how to measure it and what you can do with the data you uncover.

What is Net Promoter Score?

Net Promoter Score is a metric that measures customer loyalty and satisfaction.

Marketing consultancy Bain and Company developed it in the early 2000s to help clients gather customer feedback.

NPS asks one question, and one question only:

On a scale of 0 to 10, how likely are you to recommend this company/product/service to a friend or colleague?

Based on their score, NPS groups respondents into three categories:

• Promoters. Customers that score a 9 or 10. These people are most likely to recommend your business to others through positive word of mouth and be loyal to your brand.
• Passives. Customers that score a 7 or 8. These people are happy with your business but will probably not go out of their way to recommend you to others. They may switch to another brand if a better offer comes along.
• Detractors. Customers that score a 6 or below. These people are unhappy with your business and may not buy from you again. They may even discourage other people from buying from you.

You calculate your Net Promoter Score by taking the percentage of promoters and subtracting the percentage of detractors from it.

So let’s say you’ve calculated that 40% of your customers are promoters, 40% are passives, and 20% are detractors.

This means your NPS is 40 – 20 = 20.

A Net Promoter Score can range from -100 to 100.

What’s a good NPS score? Theoretically, anything above a zero is good as this means you have more promoters than detractors. According to Bain and Company, a Net Promoter Score above 50 is excellent, while over 70 is exemplary.

Getting over 70 is not an easy task though – even big brands like Netflix, Apple, and Amazon struggle to reach this magic number!

What can I do with the data that Net Promoter Score identifies?

An advantage of NPS is that you can use it to identify potential issues before they become major problems. For example, if your Net Promoter Score drops suddenly, it might be a sign that something is wrong, and you need to correct it before it significantly hurts your business.

Here’s a fantastic case study from Hotjar about a client in the jewellery sector and how it used Net Promoter Score to its advantage. The client found that its product NPS was lower than its service NPS.

This meant that while customers were happy with the level of customer service they received, the products were not as high-quality as they expected. The client focused more resources on product manufacturing and design, boosting revenue by 70% as a result.

Another great way to enhance the data you get from your NPS is by segmenting customers into groups. For example, are Gen Z customers more likely to be positive about your brand than Gen X customers?

This can help you see what drives different demographics and means you can alter your marketing accordingly.

You can also ask specific customers for additional feedback. For example, you can reach out to detractors to see where you went wrong and how to put things right.

This can be a great way to show you’re listening to your customers and turn them into advocates for your brand.

Where can I use Net Promoter Score?

As it’s so easy to implement, you can use Net Promoter Score across a range of digital marketing channels. For example, you can ask the question:

• On your website
• In your mobile app
• In a paid advert – retargeting ads are great for this as you can appeal to customers who have been through the checkout process
• In an email – for example, the email below was sent after a purchase

The great thing about NPS is that it works offline too. For example, you can ask customers to fill in a card after you’ve worked with them, or ask the question at the end of a phone call.

What are the advantages of Net Promoter Score?

A critical advantage of NPS is that there’s only one quantitative question for customers to answer. As a result, people are more likely to provide feedback.

The typical NPS response rate can be anything between 4.5% and 39.3%.

Another benefit is that because you’re only asking one question, NPS is easy to benchmark. You can quickly and efficiently track customer satisfaction rates and even compare your marks to other businesses in your industry.

Here are some industry benchmarks to get you started.

What are the disadvantages of Net Promoter Score?

The main disadvantage of Net Promoter Score lies in its simplicity – many companies don’t like using it as it’s too high-level. While it tells you how customers feel, it doesn’t tell you why they feel that way.

Although, of course, if you want to know more about why a customer gave you a specific score, you can ask them an open-ended follow-up question.

Another potential issue is that Net Promoter Score only focuses on ‘promoters’ and ‘detractors.’ This means that the ‘passives’ – those who don’t actively recommend your brand but don’t have negative feelings about it – typically end up ignored.

Is Net Promoter Score right for my business?

It ultimately depends on your goals and position as a business.

In our experience, these are the types of businesses that can best benefit from NPS:

• Business with recurring customers. NPS is all about measuring loyalty and repeat business. If you find that most of your customers make one-time purchases, Net Promoter Score may not provide you with the information you need.
• Businesses that offer simple products and services. If you offer more complex products and services, you might find the simplicity of NPS doesn’t give you the detail you need.
• Businesses with a clear target audience. NPS works best when you know who your ideal customers are. If you’re not sure, or you target a broad customer base, you might not be able to do a lot with the feedback.
• Businesses that prioritise the customer experience. Net Promoter Score shows what customers think of your brand and how you can make things better. This means it’s ideal if your main goal is to keep customers happy and discover how you can improve customer loyalty.

In conclusion

Getting good customer feedback is never easy.

If you’re struggling, NPS could be a quick and effective way to see how you’re doing and pinpoint customers who could become advocates for your brand.

Net Promoter Score isn’t the answer for every business. But if your ultimate goal is to measure repeat business and loyalty, the feedback you receive could be invaluable.

Want to know more about how to transform your business with digital marketing? Check out the Xigen Insights blog!