Customer loyalty is one of the most important concepts today. I’m sure everyone has a schema in mind regarding ‘loyal’ customers, but I believe that data-driven approaches are always more valuable than intuitive knowledge when it comes to measurement and evaluation.
In this article, I will talk about the concept of NPS (Net Promoter Score) using the resources of Pisano, one of the most successful SaaS companies about UX in the world.
What is NPS?
One of the most complex parts of every feedback gathering campaign is to clean up the data and calculate the results. Fortunately, this step is much easier when you are using the NPS (Net Promoter Score) metric, as the data is already clean and ready to interpret.
The only thing you need to do to calculate the NPS is to gather the data, put it inside a formula and there comes the final result. It is even easy to decode the result as you are facing some positive or negative percentages.
NPS is a metric specifically developed to measure customer loyalty, judging by a customer’s likelihood to recommend a product to others. The NPS survey is specifically centered around the question: “How likely is it that you would recommend Company to a friend or colleague?”
Customers can then respond on a scale from 1 (very unlikely) to 10 (very likely). Those responses separate customers into three categories:
Promoters (9–10)
Promoters are the ones who boost profits as long-term customers and are more likely to refer your company. They are a great source of testimonials, reviews and future referrals.
Passives (7–8)
Passives are, as the name suggests, those that don’t really care. Their experience with your company, product or service is neither positive, nor negative enough to influence their behavior.
Detractors (1–2–3–4–5–6)
Detractors are customers whose experience with your business was mostly negative. Without proper handling, detractors can go on to churn, leave bad reviews and cause negative word of mouth.
After you categorize the numbers within these groups, you can have a raw image of your brand and how it has performed. If you are looking for a final, big picture, you should proceed to one last stage. Using the net promoter score formula, you can calculate the overall NPS performance of your brand. To do that, you need to go through some steps.
How NPS is Calculated?
First, convert the numbers to percent. What percent of your respondents are categorized as promoters? How about passives and distractors?
You then need to omit the passive respondents. This is because they are not making any positive or negative impact. For this purpose, you just need to ignore every response that was either 7 or 8.
You then simply can subtract the Detractors from Promoters.
NPS = Promoter % – Detractor %The result will be a percentage between -100% to +100%. While the former means the worst outcome possible, the latter represents a perfect company in which every customer is a business ambassador.
Sample NPS Question
For example:
If the distribution of the answers given to the questions that affect the positivity in the whole questionnaire is :10 very good, 4 good and 2 bad.
Calculation is done as follows;
(100x10) + (4x75) + (2x0) / 16 = 81.25%NPS Formula:
(Number of Promoters - Number of Detractors)/ Number of Participants x 100References
https://www.pisano.com/en/academy/net-promoter-score-calculation
https://www.pisano.com/en/support/how-is-the-np-calculated
https://www.pisano.com/en/academy/nps-an-effective-system-for-feedback
https://www.pisano.com/en/academy/net-promoter-score-survey
https://www.pisano.com/en/support/net-promoter-score-nps
