Net Promoter Score (NPS) to help each company

In this article, we will examine the basics of NPS and discover how to evaluate customer satisfaction and brand loyalty by asking a single question.

NPS or Net Promoter Score: an index to determine consumer commitment to a product or company (readiness index to recommend).

The concept of Net Promoter Score (NPS) was created by Fred Reicheld, who announced it for the first time in the article "The One Number You Need to Grow" published in Harvard Business Review in December 2003. In 2006, he published a book entitled "The Ultimate Question: Driving Good Profits and True Growth". He continues his arguments on the theme of loyalty, profitability and growth of the company.

Fred argued that the use of traditional surveys is not enough to know the attitude of customers to the business, because they are usually too long and complex, they also have a low percentage of responses and give often incorrect statistics.

Fred insisted on asking clients only one question: "Are you ready to recommend our products or services to a friend or colleague? And the answers collected were used to calculate the NPS mark.

How to conduct an investigation to determine the NPS?

To calculate the NPS, you must ask customers a question and analyze the responses received:

"Score on a scale of 0 to 10, how likely are you to recommend our company, services, or products to a friend or colleague, and why?"

The next step is to create a survey and send it to customers. Surveys to calculate the NPS are usually sent via email, SMS, pop-up messages or over the phone. Ideally, feedback forms received should be processed in less than 24 hours.

After the survey, all the letters received (and at the same time all your clients) must be segmented according to the estimates received:

Rating from 9 to 10: Promoters

They like the products of your business and, perhaps, would advise your brand to potential buyers. They always make repeated purchases and are very valuable to the company.

Rating from 7 to 8: neutral

They do not broadcast negative reviews on the brand, but can easily go to another company if they find a better deal. They do not say anything bad about you, but they do not like your products enough to advise them around them.

Rating from 0 to 6: Reviews

They are dissatisfied with your service and probably undermine your brand's reputation with their negative reviews.

NPS calculation formula

The NPS is calculated by subtracting the percentage of critics from the percentage of promoters. Here is the NPS calculation formula:

NPS = (% of promoters) - (% of critics)

Range of evaluation: from -100 to +100. If your NPS is equal to 100, this means that all your customers are brand promoters (that's the best scenario) and if it's equal to -100, all your customers are critics (the worst case scenario).

Advantages of NPS detection

  • Easy to understand
  • NPS is easy enough to understand and use. This is not a complex study; this survey includes only one question.

  • Easy to manage
  • NPS surveys are short, clear and involve a quick response. This is one of the reasons they receive high speed responses.

  • Provide effective feedback
  • Unlike traditional surveys, a survey to identify the NPS allows us to provide customers with quality feedback.

  • Segmentation of the target audience
  • By analyzing the NPS score as well as users' demographics and behavioral data, you can understand why they prefer your products or not.

  • Revision of the sales plan
  • Qualitative feedback, obtained by conducting surveys to determine the NPS, can be used to identify problems faced by customers and to develop a more effective sales plan.

  • Reduced churn
  • An NPS survey can be a useful tool for interacting with clients and preventing their departure.

  • Set the right goal
  • With the introduction of this survey, it is possible to instill in the employees of the company a common goal: customer satisfaction and long-term relationships with them. Setting a common goal can also be a good motivation for employees.

  • Competitive advantages
  • Conducting a survey to identify NPS can give your company a significant competitive advantage over companies that do not use it because it allows you to find your mistakes and correct them.

  • Availability for any business
  • Some companies are not able to immediately hire a special team to determine their success with customers, and conducting a survey to calculate the NPS is a very inexpensive and effective way to track the "mood" of customers.

    AZN has developed its own component for collecting and measuring NPS data and integrated it with customer feedback module which allows our clients to measure customer sentiment as Voice of the Customer solution in Customer Intelligence Suite. At the same time, we have already mentioned the availability of this system. Just add a few lines of code to your project and start measuring your company's NPS. Contact us for more details.

    However, as the creator of the NPS system says:

    "What is important is not the evaluation, but what you do with it to get promoters who really matter"

    We will address the importance of NPS assessment for business in our next article.

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