Net Promoter Score (NPS)
The Net Promoter Score (NPS) is a key figure that is intended to provide information about the success and customer satisfaction of a company. A simple, standardized customer survey is used to obtain an assessment and feedback from customers or users, from which it should be possible to calculate a measurement value that can be compared across companies.
The Net Promoter Score system was developed by Fred Reichheld, author and business strategist at Bain & Company, and Satmetrix Systems. With the help of the NPS, companies should be able to easily obtain feedback and data on the satisfaction of their customers and derive further indicators for their work from this data. Since the survey and the response options are standardized, the score enables comparability with other companies. The Net Promoter Score is primarily used as a method in online marketing.
To determine the Net Promoter Score, companies ask their customers about their willingness to recommend the provider to others. Respondents can express their satisfaction with a value from 0 (very unlikely) to 10 (very likely). To collect the survey responses, only a single question is asked, which is supplemented if necessary by an open response field in which customers can provide written feedback. The responses are then used to calculate a key figure – known as the Net Promoter Score – which is intended to give the company an indication of customer loyalty and satisfaction.
How the Net Promoter Survey works
To determine the Net Promoter Score, a simple survey – for example, by e-mail – is sent to (a representative group of) customers or user(s). The survey includes the question, “How likely would you be to recommend this company to friends or colleagues?” As an answer option, the respondent is provided with values from 0 to 10 on a number scale. The higher the number a customer chooses, the more likely they are to recommend the company.
After the user has rated the company on the scale, he can provide additional feedback. An open text field is available for this purpose, in which the user can enter in writing what he or she particularly likes or dislikes about the company being surveyed.
The information and, if applicable, the customer’s feedback are transmitted to the company, which can then evaluate the survey results (with the help of a tool) and calculate the Net Promoter Score. As a rule, the participants are not anonymized, so they can be clearly assigned to their answers.
How the Net Promoter Score is calculated
In order to calculate the score that the company achieves in the Net Promoter Score (NPS) from the participants’ answers, the number scale is divided into three levels:
Respondents who score 9 or 10 are among the promoters who view a company very positively and would recommend it to others.
Respondents who award 7 or 8 points are classified as neutral toward the company. They are considered so-called passives or indifferents, who would not recommend the provider to others, but would also not damage its reputation with negative reviews. Accordingly, they are neglected in the calculation of the Net Promoter Score.
Respondents who award 0 to 6 points are so-called detractors or detractors. They are critical of the company and express this criticism. For example, they may warn other users or potential customers not to use a company’s service or products or publish bad reviews.
To calculate the score, the percentage of Detractors is subtracted from the percentage of Promoters. The difference results in the Net Promoter Score, which can thus range between -100 and 100.
A survey shows that 65 percent of the participants are Promoters, i.e. they award 9 or 10 points. 20 percent award 7 or 8 points and are therefore not included in the calculation as passives. 15 percent of the respondents are classified as Detractors with 0 to 6 points.
Detractors are now subtracted from Promoters:
The Net Promoter Score for this company is therefore 50.
Goal and advantages of the Net Promoter Score
Determining a key figure such as the Net Promoter Score can be useful for gaining an initial impression of customer satisfaction. A survey of this kind focuses on the customer’s point of view in a simple way and thus provides important feedback. A company is thus encouraged to consider other points of view, encounters unknown problems and can better assess its own strengths and weaknesses.
The number of participants is comparatively high for a procedure as simple and quick to carry out as the Net Promoter Score. Many positive and negative opinions can thus be perceived quickly and without great effort, and customers with positive and negative attitudes can be identified. Once they have been identified, critics can be swayed if necessary and promoters can be positively instrumentalized. Especially in the case of important influencers, it can be worthwhile to contact them and enter into a dialog.
In addition, the Net Promoter Score is intended to make companies comparable with each other through the standardized question and answer scheme. Companies can thus draw important conclusions about where they stand in the market. Studies also use this method to try to map the competition between companies in individual sectors.
In addition to the advantages of the Net Promoter Score system, weaknesses are also repeatedly mentioned. For example, the scoring system is often seen as arbitrary and not easily transferable to other cultures. Accordingly, in some cultures there may be a stronger tendency towards the middle, so that the 10 points are awarded less frequently. The tendency to recommend can also vary considerably from industry to industry.
Studies point out that the simple distinction between promoter and detractor is oversimplified and that only limited indications of actual customer behavior and customer loyalty can be derived from the Net Promoter Score.
Another serious point of criticism is that the survey is hardly meaningful without the additional question about the user’s reasons. Only when the participant answers the additional question about why and thus reveals qualitatively usable information can conclusions be drawn from his or her answer. However, this qualitative data again makes it difficult to make data comparable in a standardized way.
Net Promoter Score tools
With the emergence of the Net Promoter Score, more and more companies have specialized in offering tools that can be used to conduct Net Promoter surveys. Some of the most well-known providers include:
- Ask Nicely
- Reputation Loop
Using the Net Promoter Score, or NPS, companies can get an indication of customer loyalty and satisfaction. The score, or metric, is determined by a user survey shortened to a single question in which respondents rate the company on a scale of 1 to 10. With the help of additional feedback, the causes of satisfaction or dissatisfaction are also determined.
The purpose and benefits of the Net Promoter Score are controversial; there are points in favor of its use, but also some points of criticism. Nevertheless, the Net Promoter System is a frequently used method for which many companies have developed tools that they offer for a fee.
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