What is a net promoter score?

Net Promoter Score, or NPS, is a simple yet powerful way to understand how your customers feel about your business. It's based on a single question: "On a scale of 0 to 10, how likely are you to recommend [Your Company/Product/Service] to a friend or colleague?" This question helps businesses categorize customers into three groups: Promoters, Passives, and Detractors.Promoters are your biggest fans, giving a score of 9 or 10. They are loyal and enthusiastic customers who will likely recommend your brand to others and help fuel growth through word-of-mouth. Passives score 7 or 8. They are generally satisfied but not enthusiastic and could easily be swayed by competitors. Detractors score 0 to 6. These customers are unhappy and are likely to spread negative word-of-mouth, potentially harming your brand's reputation.Understanding your NPS helps marketing teams identify areas for improvement, boost customer retention, and turn customers into advocates. It provides a clear metric that can be tracked over time to see the impact of marketing initiatives and customer service efforts on overall loyalty.

How to calculate net promoter score

Calculating your NPS is straightforward once you have collected responses to the "likelihood to recommend" question.

1. First, categorize your customers:
   • Promoters: Those who scored 9 or 10.
   • Passives: Those who scored 7 or 8.
   • Detractors: Those who scored 0 to 6.
2. Next, calculate the percentage of Promoters and Detractors from your total responses.
3. Finally, subtract the percentage of Detractors from the percentage of Promoters. Passives are not included in the calculation itself, but they are part of the total responses.

The formula is: NPS = (% Promoters - % Detractors).For example, if you have 60% Promoters, 20% Passives, and 20% Detractors, your NPS would be 60% - 20% = 40. NPS is always reported as an absolute number, not a percentage, ranging from -100 to +100. A positive NPS (above 0) is generally good, while an NPS above 50 is considered excellent.

Why net promoter score matters for marketing

NPS is more than just a customer satisfaction metric; it's a powerful indicator of growth and brand health. For marketing teams, a high NPS means your customers are not just buying your products, they are advocating for them. This creates organic growth through referrals, which is often more cost-effective and trustworthy than paid advertising.

A strong NPS helps marketing in several ways:

• Identifies brand advocates: Promoters are prime candidates for case studies, testimonials, and user-generated content campaigns. Marketing can leverage these loyal customers to amplify positive messages.
• Pinpoints areas for improvement: Feedback from Detractors and Passives provides valuable insights into pain points in the customer journey, product features, or service delivery. This information can guide content creation, refine messaging, and improve product development.
• Enhances customer retention: By addressing the concerns of Detractors and engaging Passives, marketing can help reduce churn and increase customer lifetime value. Personalized follow-up campaigns based on NPS scores can be highly effective.
• Measures marketing impact: Tracking NPS over time allows marketing teams to see if their campaigns, product launches, or customer experience improvements are genuinely resonating with customers and building loyalty.

For instance, if a new onboarding process is implemented, a rise in NPS among new customers could indicate its success. Conversely, a drop might signal issues that need immediate attention.

How to improve net promoter score

Improving your NPS involves a continuous cycle of listening, acting, and communicating.

Listen to feedback

Beyond the numerical score, the open-ended feedback accompanying NPS surveys is crucial. Analyze comments from Detractors to understand their frustrations and from Promoters to identify what they love most. Use text analysis tools to find common themes.

Act on insights

Develop specific action plans based on the feedback. For Detractors, this might involve personalized outreach to resolve issues. For Passives, it could mean offering exclusive content, loyalty programs, or product updates that address their needs. For Promoters, consider inviting them to a referral program or asking for reviews.

Communicate changes

Let your customers know that their feedback is valued and acted upon. If you fix a common issue identified by Detractors, communicate this change broadly. This builds trust and shows customers that their opinions matter, potentially turning Passives into Promoters and reducing the number of Detractors.

For example, if many Detractors mention a confusing checkout process on your e-commerce site, the marketing team can work with product development to simplify it, then promote the "new, improved checkout" in an email campaign to past customers.

NPS is a vital metric for any business focused on sustainable growth and customer loyalty. By consistently measuring, analyzing, and acting on NPS feedback, marketing teams can transform customer insights into actionable strategies that not only improve satisfaction but also create a powerful base of brand advocates. It's a continuous journey of understanding and serving your customers better.