What Is Net Promoter Score® (NPS)?

Net Promoter Score® (NPS) is a trademarked metric between -100 and 100 that captures in aggregate the propensity of a company’s customers to attract and refer new business or/and repeat business.

customer loyalty in retail

Net Promoter Score® (NPS) is a trademarked metric between -100 and 100 that measures the likelihood of a company’s customers to promote the brand through new customer references or/and repeat business.

NPS also stands for the Net Promoter System®, a trademarked system and framework that was built around the Net Promoter Score, It is a model that essentially tries to tie a corporation’s bottom line with its customers’ happiness and satisfaction with the company’s products and services. This system aims at managing corporate profits and sustainability through a customer experience lens.

When Was the Net Promoter Score Developed?

The Net Promoter Score® is a framework created by Bain & Co consultants in early 2000, and more specifically by Fred Reichheld, a partner at the firm who was leading the customer loyalty practice at the time. This Net Promoter Score concept came about after obtaining decades of field experience in customer market research, advising senior executives of Global 2000 companies on topics of customer loyalty and growth, and publishing a decent amount of literature on the subject. Harvard Business School Press published his first book on the Loyalty Effect in 1996, followed by his book Loyalty Rules in 2001.

When was net promoter score developed? Look at this NPS Timeline

Realizing the limitations of the traditional approach to customer surveys – highly complex, lengthy, labor-intensive (cross-departmental inputs), and the low response rates leading to modest or unreliable insights – Fred Reichheld and his team of consultants embarked on a quest to downsize the customer survey. This quest entailed finding a single question that would unearth a similar amount of insights as its lengthy and unwieldy customer survey counterpart and whose answer would somewhat be predictive of a company’s revenue growth.

The research project culminated in the paper The One Number You Need to Grow published in the Harvard Business School review in 2003. It summarized the findings and revealed the now extremely popular survey question “How likely is it that you would recommend our company/product/service to a friend or colleague?” and its associated Net Promoter Score.

The success of the paper, and the rapid adoption of the Net Promoter Score across organizations globally, encouraged the team to further develop the metric into a broader management model. Fred Reichheld and his disciple Rob Markey published subsequently two books: The Ultimate Question: Driving Profits and True Growth, in 2006 and The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World in 2011.

Transactional vs Relational NPS Programs

Relational NPS surveys are sent out regularly, typically on a quarterly or annual basis . The goal is to get a periodic feel for what your customers think in regards to your company. The data can be used to check how well  the company is doing and provide a benchmark to evaluate year-over-year success. 


Transactional NPS surveys on the other hand, are sent out after the consumer interacts with your company in some way. It helps a company understand the level of customer satisfaction on a more granular level. To get a full picture of how your consumers feel it is best to use both transactional and relational net promoter score programs.

GUIDE

The Modern Guide to Winning Customers with Net Promoter Score

8 Ways to Modernize Your NPS Program and Create a Culture of Customer Happiness

Download Guide

How Is Net Promoter Score Calculated?

A Net Promoter Score survey asks a single question, “How likely are you to recommend this product or service?” and a customer responds on a scale of 0-10.

The Net Promoter Score Formula is equal to the percentage of promoters minus the percentage of detractors. Promoters are customers who answered 8 or 9 to the NPS question, and detractors are customers who gave an NPS score of 0 to 6 to this same question. …Read more

What are NPS detractors, passives and promoters

What Is a Good Net Promoter Score?

A +50 NPS, would mean that the company has more than 50% promoters and less than 50% detractors. Any score above 50 is then probably good. Benchmarking is popular, but it is best to focus on continual improvement of your own Net Promoter Score.
Read more

How Do You Improve Your Net Promoter Score?

There is no shortcut to improving your Net Promoter Score. Go underwater to look at the iceberg, and understand the “why” behind the score. Learn to love unhappy customers’ feedback. And make the most of the Net Promoter System.
Read more

How to Create an Net Promoter Score Survey

There are several ways you can put together an NPS survey, each one having certain pros and cons associated with it. You can use a downloadable template, but often times those are not tailored to your exact format or needs. Using survey software allows you to create your survey much faster, but sometimes that software will only measure one metric at a time. There is also NPS-specific software or customer experience management platforms that you can use in many cases. Our CoreCX free trial allows you to get instant NPS analytics. As far as the process goes when creating an NPS survey, let’s break it down into what questions you should ask:

Demographic Questions

As with any survey, you should make sure to begin by covering any demographic and questions that you may find relevant or would help provide you with additional insights. Should you choose to segment your data eventually, you will need demographic information to do so. Be careful not to spend too much time on the demographic section of your survey, in case your participants get frustrated they haven’t gotten to the topic soon enough, or feel you’re prying too much into their personal lives. Keep your survey brief, but make sure you gather the information you need.

Your Net Promoter Score Question

This is the main purpose of your survey, and the key to calculating your score.

Your Reasoning For Your Score

This is your opportunity to let your survey respondents give a short answer in their own words to explain their score. It may be wise to limit the number of characters your participants can use here so that you don’t end up scrubbing through paragraphs of responses for a lengthy amount of time. While reading through these brief responses, try to gather the promoters and detractors for your research. If you want to scrub through responses faster, you can try using a text analysis tool.

What Could Have Improved Your Experience

This question has the potential to be redundant for your survey respondents, so be sure to use it only where you see fit. Oftentimes when someone gives a reason for their score (as listed in the previous paragraph), they’ll explain what they wanted improved in their short answer. When you feel you need more information, you can gather that using this question. 

Permission to Follow Up With the Customer

Oftentimes when doing research, you’ll want the option to be able to contact any survey respondents with follow-up questions or additional information. For this reason, it’s wise to ask your survey respondents if it would be okay for you to contact them in the future. While some participants will likely say no, you may gather a handful who don’t mind continuing a discussion on your survey topic.

GUIDE

The Net Promoter Score Software Buyer’s Guide

Choosing the right Net Promoter Score software is an important decision—but it’s no easy feat.

There are many tools and solutions to choose from, all of which have varying features — it can all be overwhelming. Luckily, there are ways to determine if a Net Promoter Score solution is right for you. Download this free guide and uncover the key questions to ask when evaluating a vendor.

Download Guide

Net Promoter Score Survey Methods—Email NPS or In-App NPS?

When it comes to gathering customer feedback for your Net Promoter Score, there are a number of different options to consider. Before we address which survey method is best for your business, let’s look at what email NPS and in-app NPS surveys look like.

Example of NPS Email Survey

InMoment offers NPS email templates that enable you to send surveys directly from your favorite email provider or CRM (like MailChimp or Marketo.) Results appear in your InMoment dashboard.

In general, respondents are more likely to leave qualitative feedback in an email survey vs. in-app respondents.

ACME Inc. email

NPS In-app Survey Example

InMoment in-app surveys appear when customers are on your website or logged into your SaaS product or mobile app. Set-up requires adding a Javascript snippet or SDK to your application. In-app NPS surveys generally attain much higher response rates than email NPS surveys.

NPS In-app Survey example

Which Is the Best NPS Method?

What should you use—email, in-app (or even SMS) NPS surveys? This depends entirely on your business model. It’s best to engage your customers where they are. Where are they expecting to hear from you? Where are they most likely to respond? Learn how to choose the best customer feedback channel for your customer base.

What Can You Do With Your Net Promoter Score?

An NPS score provides a metric to track and it allows you to monitor improvements in customer satisfaction. By running a key driver analysis, you can identify the context that helps you understand what is the biggest driver of your NPS score, allowing you to prioritize improvements in that particular  area. You also find that key drivers differ depending on age groups or genders. This allows you to adapt your approach to different target audiences so that can have the best possible experience with the brand and company

The more data that can be developed along with the NPS score, the more you’ll be able to understand about your customer and what influences their opinions and feelings. 

In the end, the goal of your NPS is to measure the likelihood of gaining new or renewed business. To read your NPS results, you’ll look at your score, ranging from -100 to +100, determine whether or not it’s what you’re looking for, then take that information and see where you can improve. 

When reading NPS graph results, you’ll typically break each variable into promoters, detractors, and neutral units, then monitor how they change over time.

Click here to learn more about InMoment’s NPS software that gives you access to instant analytics, feedback themes and more! If you’re ready to see our XI platform in action, you can get started here!

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