What if you could ask your customers a single question to predict your company's future growth? This is the question Frederick Reichheld, Managing Consultant at Bain & Company, proposed in his 2003 Harvard Business Review (HBR) article, “The One Number You Need to Know.”
Based on Reichheld’s extensive research, he found that one question was the best growth predictor for most industries: How likely is it that you would recommend [company X] to a friend or colleague? This discovery became the basis for the net promoter score.
The net promoter score (NPS) is a measure of how likely your customer is to refer you. As Reichheld stated in HBR, “The only path to profitable growth may lie in a company’s ability to get its loyal customers to become, in effect, its marketing department.”
By asking the question above, you gain a holistic view of the company. As Reichheld said, “A customer’s willingness to recommend to a friend results from how well the customer is treated by frontline employees, which in turn is determined by all the functional areas that contribute to a customer’s experience.”
Since its development, NPS has become a widely used measure of current and future success for both established and up-and-coming businesses. Its simplicity and reliability are largely to thank for NPS’s prevailing adoption.
Now, the question is how to calculate the net promoter score. Before jumping into it, you need to understand the NPS scale first.
The simplicity is derived from the fact that you’re asking customer’s one question that they answer on an intuitive, 10-point scale. These responses are categorized into three groups:
Promoters (score 9-10): These are highly satisfied and loyal customers who are likely to recommend your business to others.
Passives (score 7-8): These customers are satisfied but not enthusiastic. They are less likely to actively promote your business but are also less likely to speak negatively about it.
Detractors (score 0-6): These customers are dissatisfied and unhappy with your product or service. They may even share negative feedback with others.
In order to calculate the net promoter score, you first need to combine your results. Then, subtract the percentage of Detractors from the percentage of Promoters. The formula is as follows:
The resulting NPS can range from -100 (if all respondents are Detractors) to +100 (if all respondents are Promoters). A higher NPS is generally seen as a positive indicator of customer satisfaction and loyalty, while a lower or negative NPS suggests room for improvement.
Reichheld’s research and real-world examples show that a positive NPS correlates with sustainable, profitable growth. That’s good for investors, customers, employees, and your bottom line.
Additionally, it’s a straightforward method for tracking customer sentiment and how it changes over time. Once you understand your NPS, you can use it in conjunction with other qualitative feedback to identify areas for improvement to drive customer-centered decision making.
If you’ve calculated your NPS and it isn’t exactly where you hoped it would be, don’t fret. You are still moving in a positive direction—after all, you have more information than you did before. And now, you can start taking steps to improve your score. We’ve listed a few ideas for you to consider below.
The timing of your NPS survey can have a significant impact on the results. For example, consider the difference between sending an NPS survey after a key interaction, like a customer support touchpoint, versus regularly asking customers to complete your survey at regularly timed intervals, like quarterly or annually.
For example, when we implement a new ThoughtSpot use case for a customer, we often allow a set amount of time for the users to explore the product and perceive value. Then, three months later, we’ll follow up with an NPS survey. We’ve found this is the right timing for our product and customers, as it generates reliable, invaluable feedback.
The most common types of survey timelines are trigger based, event based, in product, or periodic. Whichever method you choose, it’s important to find the schedule that works best for your product and customer lifecycle. Additionally, you should work to avoid survey fatigue, which can also negatively impact the quality of your results.
Not getting the number of responses you’d like to collect? While timing is important, it’s not everything. Just like you, your customers are busy. Even with a survey as short and sweet as NPS, it can be hard to convince someone to take time away from their other important tasks.
If that’s the case, you may find that incentivised participation helps you gain a larger number of responses. As you grow your number of submissions, you increase the base of your mean—providing you with a more diverse respondent pool and decreasing the overall impact of your Detractors.
You can apply multiple strategies here. For example, one of our customers utilizes community coins that their customers can amass and use to give and receive recognition. Others work with financial incentives like an Amazon or Starbucks gift card raffle for the first five survey respondents. In my experience, financial incentives seem to work well, but you do need to monitor for accurate responses and bias. If you start to suspect the survey results are incorrect, test and adjust moving forward.
If you find your net promoter score is being skewed by the number of Detractors, it’s worth investigating further. These detractor numbers should alert you to a customer pain point—an opportunity for improvement. Is it the product, customer support, or the sales experience? Perhaps they don’t feel valued, or don’t feel that they’re getting value from your product or service.
You can think about a low NPS score as your check engine light. If you do further analysis, read the codes, and make the proper updates, you can usually repair the damage. While we aren’t always able to reach out to the user directly, we can reach back out to a general email letting them know we received their feedback and outlining our course correction.
For instance, if the user noted that they didn’t have enough training, we might follow up with additional resources. Better yet, this is your opportunity to build the voice of the customer into your product or service, showing the customer you care and building a loyal, long-lasting relationship.
If you don’t address the problem, that Detractor will start to do just that—detract from future sales. On social media, when talking to colleagues, and when networking with peers—an unhappy customer is likely to share negative experiences with their community, and that can negatively impact future relationships with prospects.
Last, but certainly not least, one of the best ways to improve your NPS is through your customer interactions. The teams that most often interact with those customers need the right tools and resources to ensure the experience is not only positive, but intrinsically valuable.
Some areas you might consider include:
Setting clear guidelines and expectations
Incentivizing your team with rewards or recognition
Investing in additional training and development
Monitoring customer surveys and satisfaction results via business analytics
That last point is essential. Here’s why: In all of these areas, having the right technology and access to data can help ensure you’re aligning with preset expectations, measuring the success of your rewards program, and investing in the right development programs.
Keeping a pulse on your NPS data is key to improving overall customer satisfaction.
Consider Wellthy, a company that helps people coordinate care of their loved ones by combining precision technology and world-class customer service. And by world class, we mean that they have an NPS score that hovers at or above 80.
How do they do it? It’s a six-part concerto where data plays a starring role. By employing their modern data stack and ensuring teams have access to real-time, self service analytics, they can better coordinate care, understand employee workload, identify areas for improvement, and actively monitor which strategies are having the most impact.
By infusing a data-driven mindset with these tried-and-true strategies, you have the power to change your company’s destiny. And ThoughtSpot is here to help.
Our AI-powered search experience allows anyone to find answers hiding in their data, create real-time Liveboards, and monitor indicators that can help you make data-driven decisions related to your NPS—and every other aspect of your business. See for yourself with our 30-day free trial.