What Is Net Promoter Score (NPS)?

Happy NPS Client

NPS stands for Net Promoter Score, a metric that measures customer loyalty and satisfaction. It is a simple way to measure customer loyalty that is widely used by businesses around the world. 

The NPS is intended to help businesses understand how their customers feel about their products and services. It can help companies identify areas for improvement and better target their marketing efforts. It can also help businesses monitor customer satisfaction over time, as well as compare their performance to competitors. 

The NPS can be used to measure customer loyalty, satisfaction and engagement. It is an important metric for businesses to measure and track, and is used as a key indicator of customer loyalty. The NPS can be used to identify customer segments, such as those who are more likely to recommend the company’s products and services to others. It can also be used to measure customer engagement with a company’s products and services. 

What is the benefit of using NPS?

  1. Access to Actionable Data: NPS provides businesses with actionable data that can be used to improve their customer experience. By collecting customer feedback through NPS, businesses can gain insight into where their customer service is lacking and where improvements can be made. This data can be used to make changes to customer service processes, product offerings, and more. 
  2. Improved Customer Loyalty: By measuring customer loyalty through NPS, businesses can identify their most loyal customers and better understand their needs. This allows businesses to focus their efforts on building relationships with these loyal customers, which can result in increased customer loyalty and repeat business. 
  3. Increased Referrals: NPS can also be used to encourage customer referrals. By collecting feedback from customers and using it to improve their customer experience, businesses can increase customer satisfaction and loyalty, which can lead to more referrals. 
  4. Cost Savings: NPS can help businesses save money in the long run by reducing customer churn. By measuring customer loyalty and taking steps to improve customer satisfaction, businesses can reduce customer churn and save money by avoiding the costs associated with acquiring new customers. 
  5. Improved Brand Reputation: NPS can be used to measure customer satisfaction and loyalty, which can have a positive impact on a business’s brand reputation. By measuring customer satisfaction and taking steps to improve it, businesses can demonstrate to customers that they value their feedback and are committed to providing a positive customer experience. This can help build trust with customers and improve a business’s overall brand reputation. 

How is net promoter score (NPS) calculated? 

NPS is calculated by asking customers a single question, “How likely is it that you would recommend our company/product/service to a friend or colleague?” Responses are categorised on a scale of 0 to 10, with 0 being the least likely and 10 being the most likely to recommend. 

Once the responses for the NPS question have been collected, the next step is to calculate the NPS score. The NPS score is then calculated by subtracting the percentage of detractors from the percentage of promoters. For example, if 30% of respondents are promoters and 20% are detractors, the NPS score would be 10 (30% – 20% = 10). 

What are the 3 categories of NPS?

NPS results are categorised into three distinct categories: Promoters, Passives, and Detractors. Each category is represented by a different score and each category provides valuable insight into the customer’s experience with the company. 

Promoters

Promoters are customers who are extremely likely to recommend a company’s product or service to others. They are highly satisfied and loyal to the company and are likely to keep buying and recommending the company’s products and services. Promoters are scored on a scale of 0-10, with 10 being the highest score. A score of 9 or 10 is considered a Promoter. Promoters are considered valuable to companies because they are highly likely to purchase the company’s products and services again in the future, as well as recommend the company to others. They typically have a positive view of the brand and are more likely to be engaged with the company’s marketing efforts. 

Passives 

Passives are customers who are satisfied with the company’s product or service, but are not as likely to be engaged with the company’s marketing efforts or recommend the company to others. They are scored on a scale of 0-10, with 7-8 being considered Passives. Passives are valuable to companies because they are likely to keep buying the company’s products and services, but are not likely to recommend the company to others. While they may not be as loyal to the company as Promoters, they still provide valuable insight into customer satisfaction. 

Detractors 

Detractors are customers who are not likely to recommend a company’s product or service to others. They are typically dissatisfied with the company’s products or service and are not likely to purchase again in the future. Detractors are scored on a scale of 0-10, with 0-6 being considered Detractors. Detractors are important to companies because they provide valuable insight into what areas of the company need improvement. Companies can use the feedback from Detractors to identify areas of improvement and take action to improve customer satisfaction. 

What is a Good NPS Score? 

Generally, NPS scores range from 0 to 10. A score of 5 is considered neutral, meaning that the percentage of promoters and detractors are equal. A score of 9 is considered excellent, meaning that the percentage of promoters is much higher than the percentage of detractors. 

The higher the NPS score, the better the customer experience. 

However, it is important to note that NPS scores can vary greatly depending on the industry. For example, a score of 5 would be considered excellent in the banking industry, but it would be considered average in the hospitality industry. It is important to compare your score to the industry average to get an accurate understanding of how you are performing. 

In addition, it is important to keep in mind that NPS scores can vary from month to month or even from day to day. This is why it is important to track your NPS score over time so that you can identify trends and make changes as needed. 

Finally, it is important to understand that NPS scores are only one metric to measure customer satisfaction. It is important to look at other metrics such as customer feedback, customer service ratings, and customer churn rate to get a full picture of how your customers are feeling. 

Conclusion

NPS is a powerful tool for measuring customer loyalty and gaining valuable insight into customer experiences. It can be used to access actionable data, improve customer loyalty, increase referrals, save costs, and improve brand reputation. By using NPS to measure customer loyalty, businesses can gain valuable insight into their customer base and take steps to improve the customer experience and build relationships with their most loyal customers.


To learn how Quantanite can improve your company’s employee satisfaction levels contact us today.

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