The Ultimate Guide to Net Promoter Scores, Your Secret Weapon for Business Success
Read Time: 14 minutes
Looking to understand and use the Net Promoter Score (NPS) to derive value for your business? You’ve come to the right place. In this comprehensive guide, we’ll give you a complete NPS overview, covering the NPS score meaning, how to obtain it and how to use the data for your strategic benefits. By the end, you’ll clearly understand how to measure customer loyalty, analyze feedback and implement improvements that drive growth and satisfaction. Let’s get into how NPS can transform your approach to customer engagement.
Net Promoter Score is a measure of customer loyalty in contact centers and other business types, captured through single-question post-engagement surveys. It is based on customer answers to the question, “How likely are you to recommend our company/product/service to a friend or colleague?”
Co-developed by Bain & Co. and NICE Satmetrix, NPS categorizes and enumerates percentages of customers, calling them promoters, detractors or passives:
Values are assigned to each of these categories:
Net Promoter Scores can range from -100 (all detractors) to +100 (all promoters).
While the primary NPS question is usually, “How likely are you to recommend our company to a friend or colleague?” It may also be supplemented with a second question or more that can be as simple as “Why?” Additional questions can reveal the reasons behind the customer’s initial rating and allow companies to collect data that can be used to identify and analyze opportunities for operational improvements.
Other questions might be built around the specifics of the transaction, such as:
Remember that you aren’t bound to the standard NPS question. You can customize your questions as needed to gain deeper insights. These questions can be quantitative or qualitative, depending on your goals.
The NPS Score forms the basis of a system that focuses a company on customer loyalty through customer and employee relationships. It works as an echo chamber for defining cultural values, has influence over core economics and commands a strategic commitment from top executives down through the ranks.
Beyond the composite score, the underlying elements provide context for the overall rating. Companies analyze the comments to determine whether they can make improvements. Understanding the NPS meaning in customer service helps businesses focus on the primary drivers of customer satisfaction and loyalty for more targeted and effective strategies.
NPS scores are versatile metrics that can measure numerous aspects of brand perception, customer satisfaction, loyalty, engagement and even employee performance. NPS scores can also be used to track various metrics for individual products, employees and business locations. Here are some common factors companies use to gauge the health of their operations:
Say, for example, you collected 100 responses — 60 of which were promoters, 20 were passives and 20 were detractors.
Promoters: (60/100) x 100 = 60%
Detractors: (20/100) x 100 = 20%
NPS = 60% – 20% = 40%
So, what does the NPS score mean, exactly? Here’s a breakdown of the NPS rating system and what each range of scores means for a business:
Once you know your company’s NPS score, as explained above, and what it indicates, you can start reading, interpreting and using the results.
Knowing your NPS results for various customer segments and who you’re doing well with can reveal important insights and opportunities for your business. Start by breaking down NPS scores by demographics, behaviors and locations, such as:
Evaluating your company’s Net Promoter Score is best done in context. While a company’s NPS is important on its own, these scores become more helpful when you use them to compare your organization’s placement against its peer group benchmarks. Industry and competitor NPS scores compared with yours can reveal contextual information about how your company’s scores stack up.
If you aren’t sure how your industry performs on average, there are several resources available. NPS Co-developer NICE Satmetrix is one of several organizations that compile industry NPS averages and other company data on NPS for your reference. If your numbers are higher than industry or competitive scores, that is a positive. Lower scores indicate the industry or competitors are performing better in their Net Promoter Scores than your company. Having a comparison for context will guide you in setting reasonable targets and areas for improvement.
NPS can change from day to day, especially when it comes to transactional feedback. If you’re making changes based on the feedback you get, tracking NPS can help you see how effective those changes are. More importantly, however, you’ll be able to see trends and seasonal fluctuations over the long term.
Find a survey platform like SurveyMonkey or Qualtrics that allows for easy data collection, segmentation and analysis. Having data visualization tools to create dashboards and reports can make it easier to highlight trends and progress. Then, you can begin to investigate the factors behind the trends, learn why customers love your service and what needs improvement to close the loop.
Your NPS score will provide helpful insights to use as the basis for follow-up and changes. Here are some suggestions for doing so:
NPS programs can be broadly classified as either transactional or relational. When you know the difference, you can utilize customer feedback more effectively.
A transactional NPS survey solicits immediate feedback after a customer transaction or interaction, such as completing a purchase, using a service or reaching out to customer support. This feedback can help businesses quickly address issues related to their product or service.
Such a question might be something like, “How would you rate your recent interaction with our support team?” Or, “How likely are you to recommend our brand to a friend based on your recent purchase?”
The benefits of a transactional NPS can include:
On the other hand, a relational NPS helps businesses keep a pulse on their long-term customer loyalty. This type of NPS measures sentiment and offers perspective on the customer relationship a company fosters. It’s almost a proxy for organizational goodwill beyond the transactional element mentioned above. These surveys are usually sent monthly or quarterly.
Relational survey questions could sound something like, “Overall, how satisfied are you with our company’s products and services?”
A relational NPS offers:
Medallia and Cisco are two companies that use NPS within a larger operating context. Each has unique features and integrations that align with its platforms and services.
Medallia is a customer experience management company that can enable contact center managers to measure and monitor Net Promoter Score. The company provides an NPS program that can integrate NPS data with your CRM, as well as high-volume surveying and real-time reporting. The system allows customer follow–up plus identification and prioritization of improvements in its planning features.
According to Medallia, their Net Promoter Score lets companies measure the effectiveness of their improvements and the impact on the bottom line.
Automated systems, such as Cisco Unified Contact Center Enterprise (UCCE), can be configured to measure and allow managers to monitor Net Promoter Score and other metrics.
Through the Cisco UCCE, two types of surveys can be produced via email, post chat and phone. The phone surveys are set up through the system’s IVR (interactive voice response).
The surveys can be binary, recording a yes/no or numerical answer, or freeform, allowing the voicemail system in the IVR to record the customer’s comments. The phone surveys are based on the system’s IVR; surveys can be scored in-system and are written to a database.
Net Promoter Scores are most often used to collect feedback from customers, but some companies also use them to determine employee sentiment, loyalty and the likeliness of staff members to recommend their workplace to job seekers. Importantly, this score can help predict employee retention and indicate the need for company improvement. This type of NPS is referred to as the Employee Net Promoter Score (eNPS).
While the eNPS can help determine how much of a company’s workforce is satisfied and engaged, businesses tend to have greater success with more detailed survey types that elicit
specific feedback and elaboration. An eNPS is only one question and doesn’t offer context behind an employee’s responses, so the data may not be as helpful as an employee engagement survey would be, for example.
Setting up a Net Promoter Score system in your business is a process that goes well beyond simply asking the single NPS question. Executives, managers and front-line employees must all be on board to make the system effective.
You should determine if you will implement NPS with in-house resources or seek the expertise of a provider such as Medallia.
Here are five areas to consider when implementing NPS:
Include the NPS question, “On a 0-10 scale, how likely is it that you would recommend our company/product/service to a colleague, family member or friend?”
Once you have implemented an NPS system, follow its progress to ensure that it’s effectively reflecting customer experiences and feeding the continuous improvement process.
Communicating progress improvements to the team should help perpetuate the buy-in that was necessary to begin the comprehensive NPS process.
The system should be continuously updated to incorporate changes that result from customer response.
A simple NPS definition is a measure of customer loyalty in the contact center captured through post-engagement surveys. It is based on customer answers.
A good rule of thumb is that a score higher than 0 is considered good; higher than +50 is considered excellent; and more than 70 is world–class. A more relevant comparison is your organization’s placement against its peer group benchmarks.
Evaluating your company’s Net Promoter Score is best done in context. Benchmarks that provide comparisons against which you can measure your company’s scores are compiled in categories, including the industry and your competitors.
Net Promoter Score is based on the answer to one question. The question posed to customers is: “On a 0 to 10 scale, how likely is it that you would recommend our company/service/product to a friend or colleague?” The rating scale allows the respondents to be categorized as promoters, passives and detractors.
NPS can be characterized based on how the survey underlying it is used. Transactional NPS is collected through surveys taken after each transaction. Relationship NPS is a survey that may be taken periodically — annually or quarterly, for instance — to measure the customer’s relationship with the company.
At Global Response, we understand that providing exceptional customer experiences is key to building lasting relationships and boosting your bottom line. That’s why we integrate the NPS into our customer experience management solutions to help you achieve this goal. Learn how we can help you harness the power of NPS scores and drive lasting success.
