Could there really be one question to rule them all?
As we continue our deeper look at CX metrics that drive strategy and business decisions, we’d like to take a closer look at calculating Net Promoter Score—or NPS. Getting a better understanding of exactly how your organization’s NPS is determined can provide better clarity on what you’re measuring.
We’ve talked before about how important NPS is in learning about the reasons behind your customer satisfaction levels and overall loyalty to your brand. Through this analysis, you can not only gain new customers, but also take advantage of the thing that makes NPS truly powerful—expansion revenue. Expansion revenue is revenue gained from your existing customers. The more loyal your customers, the more likely they are to go to you before any other brand and increase their spend, keeping you relevant and profitable.
In essence, NPS can help you determine greater profitability forecasts when used properly.
Before you get to the calculation, make sure you have completed a survey with respondents where you include a rating question that measures NPS. Most NPS surveys simply ask, “How likely are you to recommend [product/service/brand] to others?” using a 0-10 scale.
1. Separate your respondents
Let’s visualize this through a real-world example. Hope Clothing sends out an NPS survey and they have 100 respondents. Each respondent rates their experience between 0 and 10, which marks them as one of 3 subtypes of customers:
- Promoters – those with scores from 9-10
- Passives – those with scores from 7-8
- Detractors – those with scores from 0-6
As you can see, it takes a lot of work to create promoters, which makes sense: A “good enough” experience doesn’t turn someone into a brand ambassador!
2. Find percentage of promoters and detractors
The formula for NPS is simple. It looks like this: NPS = (Number of Promoters/Total number of respondents) – (Number of detractors/Total number of respondents). Now you can see why it was important to know which scores defined customers as promoters and detractors. They play a part in the overall calculation.
To continue our example, out of the 100 participants in the Hope Clothing’s survey, 70 are promoters, 10 passives, and 20 detractors.
Promoters’ percentage = 70/100 = .70 or 70%
Detractors’ percentage = 20/100 = .20 or 20%
With these numbers, you are now ready for the final step.
3. Find the score
Now that you know the promoters’ percentage and detractors’ percentage, the final step is just a bit of easy math.
Promoters’ percentage – Detractors’ percentage = Net Promoter Score
So, in our example, 70% – 20% = 50%
Hope clothing has a NPS of 50. That means out of their customer base who responded, the net promotion score, or the number of promoters over detractors is 50%. It is also important to note here that we made sure to say out of the customer base who responded. Be careful not to make broad statements when it comes to reporting data. The higher your participation rate and the more members of your customer base you can survey for NPS, the more accurate the data.