How to use NPS to activate brand enthusiasts, spot churn risks, and gauge customer satisfaction

Autopilot in Lead management on 6th of Dec 2018
How to Calculate Net Promoter Score

How to Calculate Net Promoter Score

The Net Promoter System® is a one-question survey that measures overall customer satisfaction while pinpointing three crucial customer segments: promoters, passives, and detractors. Once you’ve collected this data, you can automate follow-up journeys for each segment based on their unique needs. In doing so, you’ll increase satisfaction, reduce churn, and boost revenue.

how to calculate nps score

What's your Net Promoter Score?

What is the Net Promoter System?

Chances are that you’ve already heard of the Net Promoter System. This simple yet effective way to gauge customer satisfaction has quickly become the most popular customer feedback mechanism on the market.

Three trends have fostered a shift in control from brands to customers, helping the Net Promoter System gain momentum:

1. Technological advances have become routine, causing customer expectations to rise

2. The shift to constant connectivity has raised the stakes for brands, who must now respond when and where customers demand
3. Subscription-based businesses, which come with shorter-term contracts and lower switching costs, have exploded in the last decade — increasing the amount of risk brands must manage

Now that you understand how the Net Promoter System became popular, let’s dive into how it works.

How to measure your Net Promoter Score

You can measure your Net Promoter Score in three easy steps.

Step 1. Pop the question

You first need to ask your customers the Net Promoter Score question: How likely are you to recommend [company] to a friend?

While it’s possible to send this email using Autopilot, we recommend using a best-of-breed solution, like Delighted or Ask Nicely. In fact, Autopilot uses NPS software to send our own Net Promoter Score surveys, then we create a Zap to push data into Autopilot. Here’s the email our customers receive:

Step 2. Collect responses

After receiving your survey, customers respond directly from their inbox by clicking on a number between zero (very unlikely) and 10 (very likely).

Step 3. Calculate your score

Once you’ve collected enough responses, you can calculate your company-wide score. Simply subtract your percentage of detractors from your percentage of promoters.

net promoter score

The formula for calculating your Net Promoter Score

Let’s say you received 100 responses from your NPS survey. If 10 responses were Detractors, 30 responses Passives, and 60 responses Promoters, the percentage for each group is 10%, 30% and 60% respectively. Subtracting 10% (Detractors) from 60% (Promoters) gives you 50%. Because NPS is always presented as an integer, your NPS would simply be 50.

How often to send NPS surveys

In terms of cadence, our experts recommend experimenting with both time and event-based triggers.

AskNicely CEO Aaron Ward expanded on this point in an interview:

“High-volume, experience-based services like Uber ask for a rating after every ride, because it’s critical for them to make sure every experience is great. Professional services firms focused on building long-term, profitable relationships with their clients might send an NPS survey every month — as a temperature check. SaaS businesses like to check in with their users 4 times per year on average.”

Certain points in the customer journey are more effective than others. SaaS companies send NPS surveys either 90 days after customers sign up or 90 days prior to their renewal dates.

Whatever you do, don’t send your NPS survey to every customer at once. If you do, you won't be able to react to customer feedback in a timely manner.

The importance of benchmarking your Net Promoter Score

Benchmarking your Net Promoter Score against industry averages helps you assess your performance and set expectations for the future.

In October 2016, Temkin Group analyzed NPS data from 10,000 U.S. consumers belonging to 315 companies across 20 industries. As you can see, scores between 30 and 40 are quite common:

net promoter score

Tempkin Groups's analysis of NPS data from 315 companies

Keeping track of your Net Promoter Score also helps you assess the success of your efforts. If your score gradually increases over time, you can be confident that what you’re doing is working. If your score gradually decreases over time, you should reevaluate.

Similarly, when you make significant investments in product or service improvements, you should see these reflected in your Net Promoter Score.

Three benefits of using the Net Promoter System

Conducting NPS surveys comes with at least three benefits:

1. Increased revenue. Once you’ve identified your promoters, you can encourage them to share their experiences with others in the form of testimonials, referrals, and case studies—activities that typically result in increased sales.

2. Reduced churn. By identifying your detractors, the Net Promoter System enables you to save at-risk accounts before they churn by proactively resolving issues and reducing frustration.

3. Increased satisfaction. Being able to identify your passives enables you to deliver programs geared towards educating them about your product and/or service. By helping this group of customers get more value from your solution, you increase their satisfaction.

*Who are your promoters, passives, and detractors?
*
Based on the score they give your company, survey respondents are divided into three customer segments or groups: promoters, passives, and detractors. We expand on each below.

net promoter score

NPS survey respondents are categorized as promoters, passives, or detractors depending on their response

Promoters

Promoters are customers who respond with a 9 or higher. Because they’re satisfied with your product and/or service, they’re willing to advocate on your behalf. In other words, they’re your brand evangelists.

Responsible for 80% of your referrals, promoters accelerate the growth of your business. They tend to spend more and cost less to serve than other customers, resulting in higher profit margins. Because they recognize the value you deliver, they’re also less sensitive to price increases.

Passives

Passives are customers who respond with a 7 or 8. They’re neither likely to recommend your company, nor speak ill of your company.

Passives cost less to serve than promoters and detractors, but they also deliver less revenue, resulting in minimal profit. While passives are sufficiently satisfied, they remain open to competitive offers.

Detractors

Detractors are customers who respond with a 6 or lower. Because they’re unhappy with your product and/or your service, they’re likely to discourage others from becoming customers.

Many detractors have had negative experiences, resulting in ongoing issues. For example, detractors are resistant to price increases and tend to complain more often, increasing your service costs. They’re also two times more likely to churn.

For this reason, detractors require your immediate attention. If ignored, detractors can cause irreparable harm to your brand. In fact, some sources suggest they’re responsible for 80% of your negative word-of-mouth.

How to create data-driven customer segments with NPS data

Because the Net Promoter System identifies three distinct types of customers (promoters, passives, detractors), it also aids in your segmentation efforts.

When creating smart segments based on NPS data, don’t forget to add online behavioral and transactional data to the mix:

  • Activity. How active or engaged is the customer?
  • Recency. When did the customer last buy?
  • Frequency. How often does the customer buy?
  • Value. How much money does the customer spend?

Pairing your NPS data with other customer data can help you define more granular customer segments. And the more targeted your segments are, the easier it is to craft relevant messaging.

Consider how a journey focused on high-value promoters might differ from a journey focused on low-value promoters: After responding to your NPS survey, you can send both segments an automated email requesting a review. But from that point forward, you should tailor your messaging to suit each segment.

Because high-value promoters take full advantage of your solution, they’re especially suitable for case studies. For this reason, you should send this segment an email requesting a follow-up interview (for qualification purposes).

Low-value promoters are already brand enthusiasts but may need encouragement to upgrade their accounts. For this reason, you should focus on earning an upsell or cross-sell in emails sent to this segment.

You could also:

  • Send educational emails to inactive promoters and passives who’re new users on an account
  • Offer high-value detractors compelling, but temporary, financial incentives to continue doing business together while you work to relieve frustrations

Want to automate NPS? These templates will help you get started:

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