In a constantly changing environment with increasing competition, customers have a wide range of options available to them, leading to increased expectations. For this reason, companies are paying increasing attention to customer satisfaction, where the Net Promoter® Score plays a fundamental role.
Continuously understanding customer experience through their interactions with the company, and taking measures to improve it, has become common practice. Nevertheless, it is crucial for organizations to identify their weaknesses, discover areas for improvement, and recognize their strengths, all with the aim of enhancing their offerings. And in this process, the NPS® metric stands out as a simple and effective tool.
What does NPS® consist of?
The Net Promoter® Score or NPS® is a concept developed by Frederick Reichheld, Bain & Company, and Satmetrix Systems, and was published in 2003 in the Harvard Business Review.
It is an indicator used to determine customer loyalty, measuring how likely someone is to recommend a company’s product or service. It allows companies to analyze their promoters and detractors with the aim of improving their services from the customers’ perspective.
How is NPS® calculated?
NPS® is a ratio calculated from a single question:
How likely are you to recommend our products or services to your family, colleagues, or friends?
Customers who respond with a score between 0 and 6 are considered detractors; that is, customers whose experience has not been positive for some reason. Customers who respond with a score of 7 or 8 are considered passives, people who are satisfied but should be asked why they didn’t give a 10. Finally, those who score 9 or 10 are promoters, those who will always recommend us and will be ambassadors for our services as an entity.
To calculate the NPS®, detractors are subtracted from promoters, resulting in a percentage that measures service quality. NPS® is a value ranging from -100 (all customers are detractors) to +100 (all are promoters).
An NPS® above 0 is considered good, and excellent if it exceeds 50.
How to Understand the Net Promoter® Score?
The basic structure of the Net Promoter® Score is understandable, which explains its popularity and widespread use. If a company has more detractors than promoters, the score will be negative, and vice versa. NPS® provides companies with a clear and direct metric that should be communicated to employees who interact directly with customers. The main objective is to transform dissatisfied customers into promoters, who will spread the word and act as brand ambassadors, which directly translates into increased revenue and profits.
A high Net Promoter® Score typically indicates greater profitability for the business, while lower scores may signal the need to investigate customer satisfaction and potential loyalty issues.