One metric rises above the rest when it comes to tracking and measuring the organic growth potential that resides in your customer base. Simple yet efficient, a Net Promoter Score (NPS) is a solid baseline test that succinctly conveys customers’ satisfaction levels and indicates how likely you are to benefit from referrals from your customers.
Most businesses have adopted a data-driven, customer-centric mindset, and in a world dominated by Yelp and Google Reviews, recommendations and reviews are a key credibility factor. Whether you’re looking for a new restaurant to try or an agency to handle your marketing efforts, everyone wants to see what previous patrons and customers had to say. This growing importance placed on reviews and referrals makes the NPS an essential component for assessing how well your business is meeting or exceeding customer expectations and indicates to potential customers what they’re likely to experience should they decide to work with you as well.
Review our previous NPS post if you’re looking for a deeper rundown of what an NPS score is, but here’s a quick recap in the meantime:
Breaking Down the NPS Score
1. The Question
The purest form of the NPS, developed by Fred Reichheld and Bain & Company, consists of one question posed to customers:
On a scale of zero to 10, with 10 being highest, what’s the likelihood that you would recommend us (our company) to a friend or colleague?
The numerical answer from the responder will then help determine your NPS.
2. The Rubric
Using this question is effective, considering most people are familiar with a “0 to 10” rating system. The zero to ten score is then correlated to the following categories:
- 9–10 = Promoter – These are your customers who are actively in support of your business.
- 7–8 = Passive – They may be close to loving you, not liking you or may be ambivalent about your business.
- 6 or lower = Detractor -These are your customers who are actively dissatisfied with your services.
As with most rubrics, that 9–10 range is ideal (think of it like an A or A+ score), the 7–8 isn’t bad (C to B), but there’s room for improvement, and a 6 or lower means you need to do some thoughtful revamping.
3. The Calculation
After receiving responses from as many customers as possible, you’ll have a pool of numbers to calculate your score. From your total, find the percentage of your responders who were Promoters (9 or 10s) and subtract your percentage of Detractors (6 or lower). This will give you a two-digit Net Promoter Score. Voilà!
What a “Good” Score Looks Like
So, what number do you want to see from your calculations? Generally, you want a score that’s over 70, meaning the vast majority of your customers love you and are likely to refer you. Anything above 0 is typically considered positive, since your calculations can result in a negative number of up to -100 if you have many Detractors.
Determining your ideal score will also depend on your industry. E-commerce companies averaged an NPS score of 63 for 2019, while Hospitality had an average of 4. That’s quite a large difference, so you can see why it’s important to measure your score against competitors and others in your industry.
Below are a few 2019 scores from companies you might recognize:
- Netflix – 68
- Starbucks – 77
- Amazon – 62
- Tesla – 96
At Launch Marketing, we practice what we preach. Since 2010 we’ve calculated our NPS to ensure we’re meeting industry standards and client expectations. This year, we received a +75 score, aligning our business with high scorers such as Starbucks. To break it down a little further, we also received ratings of “Above Average” or “Excellent” in Professionalism and Reliability of Services, as well as Quality and Professionalism of Final Deliverables, from 100% of respondents.
We’re very proud of our consistently high NPS because it’s an indicator that we’re providing clients with the level of service we work hard to achieve. While we appreciate this score, we also recognize how it can serve our business as a tool for continuing a path of excellence and learning about areas for improvement.
What to Take Away from Your NPS
An NPS is a great gauge for potential customers to use, but it’s also an essential tool for your own team to take an inward look to see what can be improved and how your organization can grow.
Once you’ve calculated your NPS and compared it with other scores in your industry, you’ll have a good idea of how you stack up. If you’ve calculated your NPS in the past, you’ll also be able to tell how your perceived value as a company has improved or decreased. You can then determine what may have led to the fluctuation. For example, maybe last year you grew your customer service team by a few members, or maybe you rolled out a new app for placing orders. Companies go through numerous changes throughout the span of a year, so be sure to think about all the changes that could affect your NPS.
It’s important to think critically about your score. Not only do you want to scope out the reasons you received detractors, but also why your promoters are promoters. Find out both what’s not working and what is working, so you can intensify the good and diminish what customers aren’t as focused on or may not currently like.
While an NPS score is a great overall barometer for your business, you don’t want it to be the only way you gauge customer interest and feedback throughout the year. Rather than setting and forgetting, be sure to check in with customers throughout the year, using tools like surveys or one-on-one outreach. These check-ins are a great personal touch to your business and reminds your clients of how continuously dedicated you are to providing them with a great service or product.