Any successful business is built on the foundation of satisfied customers. Assessing the likelihood that your clients would refer your good or service to others is a useful way to gauge both their loyalty and the general health of your company. The Net Promoter Score (NPS) is relevant in this situation.
We’ll go into great depth on how to calculate NPS in this article, giving you a thorough grasp and practical insights.
What is the Net Promoter Score (NPS)?
The Net Promoter Score (NPS) is a straightforward yet effective method for gauging consumer happiness and loyalty.
It measures the likelihood that your clients will tell others about your good or service.
Businesses may use this score to better understand their customer connections and pinpoint areas for development.
Why NPS Matters
NPS is important since company growth is strongly correlated with it. Loyal customers with high NPS scores are more likely to spread the word about your business, which will boost word-of-mouth recommendations, cut down on client acquisition expenses, and enhance lifetime value.
How to Calculate NPS
Calculating NPS involves four straightforward steps:
- Step 1: Survey Your Customers
To calculate NPS, start by asking your customers the ultimate question: โHow likely are you to recommend our product/service to a friend or colleague?โ
Customers respond on a scale of 0 to 10.
- Step 2: Categorize Responses
Sort the answers into three categories:
- Promoters (scoring 9โ10): Devoted fans who will continue to make purchases and recommend others, fostering expansion.
- Passives (scoring 7-8): Content but unenthusiastic clients who are susceptible to offers from other businesses.
- Detractors (scoring 0-6): Disgruntled consumers who can harm your company’s reputation and obstruct expansion through unfavorable word of mouth.
- Step 3: Compute the NPS
Subtract the percentage of Detractors from the percentage of Promoters:
NPS=%Promotersโ%Detractors\text{NPS} = \% \text{Promoters} – \% \text{Detractors}NPS=%Promotersโ%Detractors
Example:
If you have 70% Promoters and 10% Detractors, your NPS is:
70%โ10%=6070\% – 10\% = 6070%โ10%=60
Using Excel to Calculate NPS
NPS computations can be made simpler with Excel. This is a fundamental method:
- Enumerate the answers you provided on the survey: Put every one of your NPS answers in a column.
- Sort replies based on COUNTIF: To determine the proportion of Promoters, Passives, and Detractors, use COUNTIF.
- Determine percentages: Multiply by 100 after dividing the counts by the total number of answers.
- Determine the NPS: Take the percentage of Promoters and subtract it from the percentage of Detractors.
Example Excel Formulas:
- Count Promoters: =COUNTIF(A:A,”>=9″)
- Count Passives:=COUNTIF(A:A,”=7″) + COUNTIF(A:A,”=8″)
- Count Detractors:=COUNTIF(A:A,”<=6″)
- Percentage of promoters:=COUNTIF(A:A,”>=9″)/COUNTA(A:A)*100
- Percentage of Detractors:=COUNTIF(A:A,”<=6″)/COUNTA(A:A)*100
- NPS: =(COUNTIF(A:A,”>=9″)/COUNTA(A:A)*100) – (COUNTIF(A:A,”<=6″)/COUNTA(A:A)*100)
Interpreting Your NPS
NPS can range from -100 to 100. Here’s how to interpret your score:
- Above 50: Excellent. Indicates high customer loyalty.
- 0 to 30: Good. Indicates a reasonable level of customer satisfaction.
- Below 0: Concerning. Indicates more detractors than promoters, signaling potential issues with customer satisfaction.
Itโs important to compare your NPS with industry benchmarks to get a better understanding of your performance.
Best Practices for Using NPS
Take into account these recommended measures to maximize your NPS:
- Send a follow-up inquiry inquiring as to the rationale behind the customers’ score. This offers qualitative information that can help you make improvements to your good or service.
- Divide Up Your Information: Examine NPS across several categories (e.g., product line, client demographics) to pinpoint certain areas that require enhancement.
- Benchmark: To discover how you compare to competitors, compare your NPS against industry norms.
- Act on Feedback: Make significant adjustments that will raise customer satisfaction using the information from your NPS survey.
- Monitor Over Time: Monitor NPS regularly to see trends and advancements over time.
Start Today
Net Promoter Score (NPS) is an essential indicator of customer satisfaction and loyalty. You may obtain important insights into your customers’ experiences and take proactive measures to increase their happiness by learning how to compute and evaluate NPS.
Recall that NPS is a valuable instrument that may steer your company toward more customer-centricity and long-term growth. It’s not simply a statistic.
Are you prepared to increase client satisfaction even further? Put NPS surveys into practice and get the information you need to increase client loyalty and spur company expansion.
By concentrating on NPS, you’re not just gauging client satisfaction but also laying the groundwork for success and ongoing development.
