All things are relative, so we need to measure using a scale of comparisons. A Net Promoter Score (NPS) is a scale that judges whether a company is doing good, average, or even below average in relation to customer loyalty initiatives.
Are recommendations really important?
Statistics show that a verbal referral, especially by a trustworthy friend or family member, is the most effective way of marketing. Moreover, it shows that customer loyalty is associated with an increase in turnover for the company since happy customers will keep buying from the company. NPS can be measured with different variables in consideration and used to adjust outcomes and increase sales.
What can NPS show your business?
NPS gives a predicted, ground value of how popular your company is with the general population. It shows the type of audience attracted and general feelings of consumers about the brand. If you provide a successful product, then there is a chance that someone will promote your company online which can reach a lot of followers, hence the importance of positive reviews
Simplified Picture of NPS Measurement
With the help of software survey administration,
two scales are used: 0-10 and 1-7 scale, with the latter being more popular.
The NPS is then calculated by subtracting the percentage of detractors from promoters.
The first question asked:
What is the likelihood that a person will recommend you to someone else?
On a 0-10 scale, people who select:
- 9 or 10 are promoters
- 7-8 are passives
- 0-6 are detractors
On a 7 point scale, people who select:
- 7 are promoters
- 5-6 are passives
- 1-4 are detractors
Add up the “promoters,” “passives”, and “detractors.” There is software available to calculate the percentage of each group.
Otherwise NPS can be calculated by this method:
- Export responses from your questionnaire/survey into a spreadsheet.
- Divide respondents into detractors, passives, and promoters.
- Add up the total responses from each.
- Divide the group total by total survey responses to get the percentage total of each group (a percentage calculator can help you with the math).
- NPS = (Total percentage of promoters) – (Total percentage of detractors)
NPS= (promoters – detractors) / (respondents) x 100
The scale is helpful but not perfect.
The range is from -100 showing all detractors to +100 showing all promoters. Anything positive is considered good and above +50 is excellent.
Disclaimer: The above information is only a blog post, and Intellegens Inc. is not responsible for any problems arising due to this advice.