April 26, 2017, posted by Kevin Smith
Ad Math: How to Calculate Your Net Promoter Score (NPS)
In this Ad Math video, we discuss how to calculate your Net Promoter Score.
Created by Bain & Company, the Net Promoter Score (NPS), is used as a quick and simple way to measure customer satisfaction. Your NPS score is based on one question, asked on a 0-10 scale (with 10 being ‘very likely’): How likely is it that you would recommend our brand/product/service to a friend or colleague?
Responses to this question are then grouped into three categories:
- Promoters (9-10): Customers that rate you either a 9 or 10 are assumed to be your best customers. These may be heavy users or your brand or just highly-satisfied with your products and/or services. This group is ideal for cross-selling, up-selling, referral, and loyalty programs. (see our post on cross-selling & up-selling)
- Passives (7-8): These are good customers, but they’re not your best. This group isn’t unhappy with you, but if a better product option or price point comes along they may jump to your competitors.
- Detractors (0-6): These are customers who are either dissatisfied or just not a fan of your brand or products. This is an important group to keep track of since their dislike of your brand/products/services can quickly turn into negative public posts or reviews which can damage your reputation online.
You then calculate your NPS score by subtracting the percentage of Detractors from the percentage of Promoters. Since we’re subtracting a percentage from another percentage, your resulting Net Promoter Score score will range from negative 100 to positive 100. However, your net promoter score should be shown as a whole number and not a percentage.
How to Use a Net Promoter Score
The best way to get value from your Net Promoter Score is to track it regularly – either quarterly, twice a year, or annually. You may also want to consider having separate NPS scores for each business unit, product, customer segments, or region to best isolate what’s working for you, and where you need to focus your attention moving forward.
For the customer, it’s a quick and easy survey, taking a few seconds vs. other surveys that take 20 minutes or more. For the brand, it’s an opportunity to put an action plan in place to increase your promoters and reduce your detractors.
So now that you know about NPS scores, please consider being a promoter of IQ by giving this video a quick like, and don’t forget to subscribe to our channel so you’re notified as new videos from IQ are posted. Lastly, if you have some Ad Math that you’d like us to dive into on an upcoming video, please let us know in the comments below.