What is Net Promoter Score (NPS)

Net Promoter Score (or NPS) is a simple methodology for understanding customer experience through feedback.

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Net Promoter Score is based on one single question you periodically ask your customers, "How likely are you to recommend this product / service to a friend?"

Companies love it because it's simple to track.

Customers love it because it's quick to reply.

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Segment answers

In order to calculate your Net Promoter Score, you should first segment all the answers of the question above.

Customers who gave you a score of 5 are called Promoters. These are the people who love you, who will come back to buy more and who are enthusiastic evangelists.

Customers who gave you a score of 4 are called Neutrals. These are the people who generally like you, but they aren't so enthusiastic about your product or service.

Customers who gave you a score between 1 and 3 are called Detractors. These are the customers who are not not particularly thrilled by your product or service. Some of them may also spread negative word-of-mouth about you.

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Calculate your NPS

You can then easily calculate your Net Promoter Score as:

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Why NPS?

The logic behind the Net Promoter Score is quite easy to understand. If a company has more promoters than dectractors the NPS is positive, and the higher the NPS the more loyal your customer base is.

But the real power behind the Net Promoter Score lies in tracking it over time and aligning it with your company goals. By making NPS transparent across the organisation and actively engaging employees to produce more promoters than detractors organisations really boost their growth. This happens in a number of ways:

Retention rate
Promoters generally have longer, more profitable relationships with a company.

Annual spend
Promoters increase their purchases more rapidly than detractors, because they tend to consolidate their purchases with their favorite supplier. They are more interested in new offerings and brand extensions than detractors are.

Pricing
Promoters are often less price sensitive than other customers, particularly detractors.

Cost efficiences
Promoters typically require less in sales, marketing and advertising costs than other customers. They generally have fewer complaints and account for fewer credit losses.

Word of mouth
Promoters generate 80 percent to 90 percent of referrals. Conversely, detractors account for most negative word of mouth.

Track and improve your NPS

Satsum can help you to easily track and improve your Net Promoter Score.

Using machine learning algorithms Satsum automatically determines what drives your Net Promoter Score and gives you recommendations on what to improve first.

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Start measuring NPS today