On April 16, 2018

Customer experience metrics: When to use Net Promoter Score®

The Net Promoter Score® (NPS) is a customer loyalty metric developed in 2003 by management consultant Fred Reichheld of Bain & Company in collaboration with the company Satmetrix. The objective was to determine a clear and easily interpretable customer satisfaction score which can be compared over time or between different industries.

NPS is determined like this:

Customers of a product, service or organization are asked:

“On a scale of 0-10 where “0” means not at all likely” and “10” means “extremely likely,” how likely are you to recommend (PRODUCT, SERVICE OR ORGANIZATION) to a friend or colleague?”

Customers who rate your product a 6 or below are Detractors, a rating of 7 or 8 are called Passives, and a 9 or 10 are Promoters. To calculate your Net Promoter Score®, subtract the percentage of Detractors from the percentage of Promoters.

What is a good NPS® score?

An NPS® score by itself is relatively meaningless. What really matters is how you compare against your peers in your industry and over time. NPS® can vary by industry, region, or characteristics of your customers like age, income level, or time with your company. To determine if your NPS® score is good or not, ask yourself:

  1.  Is it better than your competitors? If yes, then you have a good score in your industry. Measure your NPS® score against those of your competitors to determine this.
  2. Is your NPS® score growing? A good NPS®  score is one that’s higher than the score you received during a previous customer survey. Allow at least 18-24 months between NPS® surveys to measure change over time, particularly if you have initiated new marketing campaigns, rebranded, introduced new products or seen new competitors emerge.

NPS® may not be the most appropriate and insightful measure of your customers’ experience depending on:

  • Your product or service category (it may be something people don’t typically recommend to others for various reasons: not wide usage, not something people recommend to others, etc.)
  • Your market share and how many customers you have (if your share is small, few may know you in the category and be unable to rate their experience with you. NPS® ratings from non-customers are less meaningful)
  • How long customers have used your product or service (people may be less willing to recommend a product or service if they’ve used it once or infrequently)

Contact www.stakeholderinsights.com market research to discuss other equally or more useful customer satisfaction metrics.

  • By Sandy Dye  0 Comments   

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