Net Promoter Score - What it is and How it Work

This article will help you find answers to these common questions. By understanding what NPS means and how it works, you can gain insight into the minds of your customers, allowing you to improve your customer service, achieve better operational efficiency, and grow your business.

The net promoter score (NPS) is an index or score used to gauge customer loyalty. It's calculated by asking customers one question: "How likely are you to recommend our product to a friend or colleague?" It's the indirect approach of asking how happy your customers are with a product. Customers respond on a scale of 0-10. To calculate the Net Promoter Score you need to subtract the percentage of detractors from promoters. This number is your NPS.

Detractors have low regard for your product. These customers will give you a score of 0 to 6 on a scale of 0 to 10. They’re not likely to recommend your business.

Promoters are your happiest customers — the ones who love your brand so much they can’t help but tell their friends about you. These positive word-of-mouth recommendations drive business for you. Promoters are the ones who give you 9 to 10 out of 10.

Net promoter score (NPS) works by ranking your customers based on their willingness to promote your company to others. First, you ask them if they’d recommend your company to a friend or colleague. To measure this you can email your customers with a link to one of the ready-made survey templates or embed them on your website. Once the data is collected you need to calculate NPS.
To do so, simply subtract the percentage of those who answered 0-6 from those who answered 9-10.
To measure NPS you can use tools like TypeForm or Hotjar that help you to get customers' feedback and calculate the score for you.

An NPS score of 0-6 is considered poor, 7-8 is good, and 9-10 is excellent. Having a higher score does not necessarily mean that your business will have better customer retention. However, a higher Net Promoter Score score will likely lead to more referrals from existing customers, which results in more new customers being acquired at a lower cost.

If you want to improve your organization’s customer experience then should you consider using the Net Promoter Score. The score can give you valuable insights into how good your product is (according to your customers) and how your customers feel about your brand. And most importantly, NPS can help you quantify how likely customers are to make recommendations about your product or service.

The biggest issue with NPS as a metric lies in its interpretation. Asking, would you recommend our company? Can lead to results that don’t match up with customer behavior. Oftentimes, customers who are asked that question will say no just to be negative or will say yes just because they like someone asking them for their opinion. What NPS does measure correctly is if people are satisfied with your product or service — not if they would recommend it to someone else.
Check out this study for more info.

There are different ways that you can improve your NPS score. At first, I'd suggest starting with improving customer experience, you can do it by delivering exceptional customer service. Here you can find a few tips on how to do it.
Another one starts with interviewing your customers. It will help you to identify why customers gave positive or negative feedback so that you can address their concerns. Once you have figured out what areas need improvement, take actionable steps towards improving them. Make sure there is a system in place for tracking customer feedback so that negative comments aren’t left unaddressed for too long. Lastly, you want to ensure that all employees are well-trained on how NPS works so they understand what they need to do with each comment that comes in.