Do you know what Net Promoter Score is? Basically, it is a research methodology that aims to measure the degree of customer satisfaction and loyalty to a brand, service or product. Developed in the United States in the early 2000s, it is one of the most widely used metrics in the market for its efficient and simple applicability.
If you would like to understand more about the NPS, then continue reading and follow the topics below, in which we address, in the form of questions and answers, the main details of this method, including its importance and functionality!
- What is Net Promoter Score (or NPS)?
NPS, as it is better known, aims to establish a solid and easy-to-read score about customer satisfaction. In practice, market research assesses how much the consumer would recommend a company to family, friends and co-workers, for example. The same applies to products or services and other categories.
NPS is a metric whose objective is to measure customer satisfaction towards a brand, company, service or product. In addition, the market research assesses whether the customer would recommend the aforementioned elements to people in their daily lives, such as family, friends and colleagues.
Therefore, it is a method used in the market to give consistent and qualitative results that managers can use in decision making.
It is based on the following premise: “Does the customer enjoy the company’s product or service and want to share their experiences and recommend it to others?”
- When and how did this methodology come about?
Fred Reichheld’s work marked the development of the NPS method for satisfaction surveys. A partner at a company that, at the time, was a reference in customer loyalty strategies, Reichheld saw problems and limitations in the traditional methods of collecting information from consumers.
From that, he developed a study to find a question that could be used to accurately measure the customer experience, their degree of satisfaction and their propensity to become a promoter of the brand.
The project culminated in the publication of an academic article in the renowned Harvard Business School magazine in 2003, entitled “The one number you need to grow”.
The results pointed to the following question: “How likely are you to recommend our product, service or company to a friend, family member or colleague?”
Fred Reichheld’s text has spread throughout the business world and resonated as an innovative metric. The Net Promoter Score, then, began to be applied by companies in various countries – especially large companies with transnational dimensions.
The success of the results was such that it even yielded the publication of two books: “The ultimate question: driving profits and true growth” (2006) and “The ultimate question 2.0: how Net Promoter Companies thrive in a customer-driven world” (2011).
- Why use NPS in your business?
Today’s marketing practice focuses on the customer experience. This is because competition in all segments grows every day, and to win and retain leads, it is necessary to satisfy and to offer quality service.
From this perspective, it is essential to measure and understand what consumers think about your product, service, brand or company. Especially as the consensus that has been built through studies is that the most effective advertising is that done by friends, relatives and colleagues.
The NPS offers data on customer satisfaction and loyalty that are important for making decisions:
- simple and dynamic;
- quantitative and qualitative;
- standardised and palpable;
- easy to compare and analyse.
- How to calculate the NPS of your company.
First, you need to ask the customer the following question: “How much would you recommend this service or product to your family and friends?”
A scale from 0 to 10 is then presented to the respondent. The results will present different panoramas that depend on the score assigned by the consumer, as shown below:
- promoters: with a score of 9-10, these are the highly satisfied customers who will not only continue to buy but also recommend your products to others;
- neutrals: Score 7-8 and represent people who consume with average frequency but are vulnerable to competitor offers – in this case, the ideal is to work with this group to make them promoters;
- detractors: have a score of 0-6 and are dissatisfied customers, who can damage the image of your company and harm its growth with negative comments, especially on social media.
Once you know the three categories that make up the NPS methodology, let’s get to the calculation. Simply subtract the percentage of detractors from the percentage of promoters. The result is a score from -100 to 100.
X% (promoters) – X% (detractors) = Net Promoter Score
The NPS score classifies the company into four “zones.”
- excellence (NPS between 75 and 100);
- quality (NPS between 50 and 74);
- improvement (NPS between 0 and 49);
- critical (SPL between -100 and -1).
- What are the steps to applying this methodology?
Some steps are required to apply the NPS method. Below, we present the main ones for you to start using in your company. Check it out!
Delimit your potential audience
The first action is to delimit and segment the company’s target audience. Thus, it is possible to accurately monitor the level of customer satisfaction and loyalty, and even compare the data of competitors by region, age group, etc.
Write the correct question
You know that question we highlighted in the previous topics? You can adapt it to some specific objective or to your company’s reality. Some are examples are:
“How much would you recommend the company/service/product?”
“How do you rate your shopping/service experience?”
“Were you satisfied with the service?”
Show your research to the client
Use technological resources to show your research to customers. It can be sent by e-mail, SMS, social networks or on the web. The choice of dissemination channel depends on your objectives and the profile of the potential audience.
Determine the period and frequency
The determination of the period and frequency depends equally on the company’s pretensions and strategies, as well as on customer behaviour. There are various options, such as sending the market research every quarter, for example, but ideally your company should make this interaction relevant between your customer and the company at every touchpoint.
Track results, analyse and make decisions
It is essential to monitor the results, followed by analysis for decision making. After all, this is what the NPS was developed for: to gauge the level of customer satisfaction and, based on this data, to adopt measures to improve the service and/or product and increase the customer base and their loyalty.
Finally, it is important to note that regardless of whether the respondent assigned a score of 2 or 9, you should have closer contact with them after the satisfaction survey and better understand the NPS result. This allows the manager to plan and design actions to keep the customer happy or convert the status of the detractors. To do this, it is important to ask your customer the reason for their response after receiving your review. This way, you can define what kind of action is needed to build customer loyalty.