What is NPS (Net Promoter Score definition), and why should you care?

Net Promoter Score (NPS) is your secret weapon for gauging customer loyalty.

Created in 2003 by Bain and Company, NPS is now widely used by businesses globally to measure customer loyalty.

It boils down to a simple question that cuts through the noise and gets straight to the heart of how your customers perceive your business:

“On a scale of 0 to 10, how likely are you to recommend [your company/product/service] to a friend or colleague?”

• Customers who answer 9 or 10 are considered Promoters. They’re your biggest fans, likely singing your praises and driving positive word-of-mouth.

• Those answering 7 or 8 are the Passives. They are satisfied but not necessarily enthusiastic. They might repurchase, but they’re also open to trying something new from a competitor.

• Finally, customers responding with 0 to 6 are your Detractors. These are the unhappy ones, prone to sharing negative experiences and potentially damaging your reputation.

NPS transforms these responses into a single score ranging from -100 (all Detractors) to +100 (all Promoters). The higher your NPS, the stronger your customer loyalty and the more likely you will experience sustainable growth.

The benefits of NPS

But why should you care about NPS? Here are just a few reasons:

• Simple and actionable: Unlike complex customer satisfaction surveys, NPS is easy to understand and implement. The single-question format allows you to gather a wealth of data quickly.
• Predicts business growth: Research shows a connection between high NPS and metrics like customer value and revenue increase.
• Identifies areas for improvement: NPS goes beyond just a score. By analyzing the feedback from Detractors and Promoters, you can pinpoint what’s working well and uncover areas needing improvement.
• Tracks progress over time: Regularly measuring NPS allows you to track your progress over time and measure the effectiveness of your customer-centric initiatives.
• Benchmarks against competitors: NPS allows you to compare your score with industry benchmarks, giving you a sense of your competitive positioning for customer loyalty. That can help you identify areas where you excel and where you need to catch up.
• Boosts employee morale: When your NPS improves, it shows your team the positive impact of their hard work on customer satisfaction. That fosters a culture of customer focus and motivates employees to go the extra mile.

In short, NPS is a powerful tool for understanding your customers, building loyalty, and ultimately driving business success.

Calculating Your Net Promoter Score (NPS)

Net Promoter Score (NPS) is a straightforward metric, but there are a few steps involved in calculating it. Here’s a breakdown:

1- Conduct the NPS Survey:

Ask your customers a single question: “On a scale of 0 to 10, how likely are you to recommend [your company/product/service] to a friend or colleague?”

2- Categorize responses:

• Promoters (9-10): Loyal customers, likely to recommend you.
• Passives (7-8): Satisfied but neutral, open to trying competitors.
• Detractors (0-6): Unhappy customers, could damage your reputation.

3- Calculate percentages:

Divide the responses number in each category (Promoters, Passives, Detractors) by the total responses and multiply by 100% to get percentages.

4- Apply the NPS formula:

• Subtract the percentage of Detractors from the percentage of Promoters.
• NPS = % Promoters – % Detractors

5- Interpret your score:

• NPS scores range from -100 (all Detractors) to +100 (all Promoters). Generally:
  • A score above 70 is considered excellent.
  • Scores between 50 and 70 are good.
  • Scores below 50 indicate room for improvement.

Here’s an example:

If you survey 100 customers and receive 30 Promoters, 40 Passives, and 30 Detractors:

• Promoters % = (30 / 100) * 100% = 30%
• Detractors % = (30 / 100) * 100% = 30%
• NPS = 30% – 30% = 0

Remember: NPS is a valuable tool but just one piece of the puzzle. Look beyond the score and analyze the feedback from Promoters and Detractors to gain deeper customer insights and fuel improvement initiatives.

Formaloo can help you create a custom NPS survey and handle all the calculations. That frees you up to focus on what matters most: analyzing the feedback and using it to improve your customer experience.

What is a good NPS score?

So, you’ve calculated your Net Promoter Score (NPS) – fantastic! But what does that number actually mean? Is it a good NPS, a bad NPS, or somewhere in between? Here’s a breakdown to help you interpret your score:

The Net Promoter Score analysis:

• Excellent (70+): Congratulations! A score above 70 indicates you have a strong base of Promoters who are enthusiastic about your brand and actively recommending you. This translates to high customer loyalty, positive word-of-mouth, and potential for sustainable growth.
• Good (50-70): You’re on the right track! This score signifies a majority of satisfied customers, although there’s still room for improvement. Analyze the feedback from both Promoters and Passives to identify areas where you can excel and convert those Passives into loyal advocates.
• Needs improvement (Below 50): This score suggests you have a significant number of Detractors. While it’s not ideal, it’s an opportunity to identify pain points and take corrective action. Pay close attention to the feedback from Detractors to understand their frustrations and address them directly.

NPS is a relative metric. While the above ranges provide a general guideline, it’s important to consider your industry’s NPS benchmarks. Some industries naturally score lower than others.  

For example, according to a recent study, the average NPS in the tech industry sits around 60, whereas the healthcare industry averages closer to 45.

Researching your specific industry’s average NPS can give you a clearer picture of your competitive standing. The key is to track your NPS over time and measure your progress against your baseline.

Beyond the Score:

While the NPS score itself is valuable, the true power lies in the qualitative feedback from your Promoters and Detractors. Analyze their comments to understand:

• What delights your Promoters? Keep doing what you’re doing well and leverage their positive experiences in your marketing efforts.
• What frustrates your Detractors? Address these pain points directly and take action to improve your customer experience.

By combining the quantitative score with the qualitative feedback, you gain a deeper understanding of your customer base and can make data-driven decisions to improve customer loyalty and drive business success.

Transactional NPS vs. Relational NPS

Net Promoter Score (NPS) is a powerful tool, but it can be even more insightful when you consider two key approaches: transactional NPS and relational NPS. Here’s a breakdown to help you understand the difference and leverage both for maximum impact:

Transactional NPS:

• Focus: Measures customer satisfaction with a specific touchpoint in the customer journey.
• Example: You might send an NPS survey after a customer completes a purchase or interacts with customer support.
• Benefits: Provides quick feedback on specific interactions, allowing you to identify areas for improvement and address customer concerns promptly.
• Drawbacks: Doesn’t capture the overall customer experience. Repeated transactional surveys can lead to survey fatigue.

Relational NPS:

• Focus: Measures customer satisfaction with their overall relationship with your company.
• Example: You might send an NPS survey periodically, perhaps quarterly, to get a general sense of customer sentiment.
• Benefits: Provides insight into overall brand loyalty and customer perception. Helps identify long-term trends and areas for strategic improvement.
• Drawbacks: Doesn’t pinpoint specific issues as readily as transactional NPS. Might not capture immediate concerns as effectively.

The ideal combination:

Both transactional NPS and relational NPS offer valuable insights. The key is to use them strategically:

• Start with Relational NPS: Establish a baseline understanding of your overall customer sentiment.
• Follow up with Transactional NPS: After key interactions (e.g., purchase, support call), gather feedback to pinpoint specific areas for improvement.
• Analyze trends: Track both scores over time to see how customer perception evolves and measure the effectiveness of your improvement efforts.

By using both transactional and relational NPS, you gain a comprehensive view of your customer experience. You can identify immediate pain points, address long-term concerns, and ultimately cultivate stronger customer relationships that drive sustainable business growth.

What Net Promoter Score can tell you about your customers?

Net Promoter Score (NPS) is often seen as a single number, but its true power lies in what it reveals about your customers. While the score itself is valuable, it’s the underlying data and feedback that unlocks real insights. Here’s what NPS can help you measure:

• Customer loyalty:  The core function of NPS is to gauge customer loyalty. By analyzing the Promoters and Detractor percentages, you can understand how likely your customers are to recommend you, a key indicator of brand loyalty and future business growth.
• Customer satisfaction: NPS provides a general sense of customer satisfaction. While it doesn’t capture every detail, a high NPS score suggests overall satisfaction, while a low score indicates areas needing improvement.
• Customer sentiment: The accompanying feedback from Promoters and Detractors offers valuable insights into customer sentiment. What are your customers happy about? What are they frustrated with? This qualitative data helps you understand the “why” behind the score and identify areas to focus on.
• Customer lifetime value: Loyal customers are more valuable in the long run. NPS can help you predict customer lifetime value by identifying Promoters who are likely to repurchase and become brand advocates.
• The impact of initiatives:  Regularly measuring NPS allows you to track the effectiveness of your customer-centric initiatives. Do changes to your product, service, or customer support lead to an increase in Promoters and a decrease in Detractors? NPS helps you measure the impact of your efforts and identify what’s working and what’s not.

In essence, NPS goes beyond a single score. It’s a powerful tool that empowers you to understand your customers on a deeper level, build stronger relationships, and ultimately achieve sustainable business success.

Beyond customers, understanding your employees: introducing eNPS

While NPS is a fantastic tool for gauging customer loyalty, a company’s success hinges not just on happy customers, but also on happy and engaged employees. Here’s where the concept of Employee Net Promoter Score (eNPS) comes in.

Think of eNPS as NPS’s close cousin, but focused on your internal audience: your employees. Just like NPS asks customers about their likelihood to recommend a business, eNPS asks employees a similar question to gauge their willingness to recommend your company as a workplace to others.

By understanding eNPS and its components, you can gain valuable insights into your company culture, employee satisfaction, and ultimately, potential for long-term growth.

Is eNPS worth it? Unveiling the value of employee loyalty

Net Promoter Score (NPS) has become a staple for measuring customer loyalty, but is there a similar value proposition for employees? Enter Employee Net Promoter Score (eNPS), a metric designed to gauge employee sentiment and its impact on your business. Here’s a breakdown to help you decide if the eNPS survey is worth incorporating into your strategy:

The advantages of eNPS:

• Improved employee engagement: Understanding employee satisfaction through eNPS allows you to identify areas where your company culture thrives and areas needing improvement. By addressing employee concerns and fostering a positive work environment, you can boost engagement and create a more productive workforce.
• Reduced turnover: Happy employees are less likely to leave. A high eNPS score can indicate lower employee turnover, saving your company time and money associated with recruitment and training.
• Enhanced employer branding: Positive eNPS scores can be a powerful employer branding tool. High scores signal a positive work environment, attracting top talent and giving you a competitive edge in the recruiting market.
• Boosted customer satisfaction: Research suggests a correlation between engaged employees and satisfied customers. A happy and motivated workforce translates into better customer service and ultimately, higher customer satisfaction.
• Data-driven decision making: eNPS provides valuable data to inform your human resources (HR) strategies. Identifying employee pain points allows you to make data-driven decisions to improve employee experience and overall company culture.

Potential drawbacks of eNPS:

• Oversimplification: eNPS can be a blunt instrument. While it offers a general sense of employee sentiment, it doesn’t capture the nuances of employee experience. It’s crucial to complement eNPS with qualitative feedback mechanisms like open-ended survey questions or focus groups.
• Benchmarking challenges: Industry benchmarks for eNPS can be limited, making it challenging to compare your score against competitors.
• Potential for bias: While rare, there’s a possibility that employees might feel pressured to give a positive response, skewing the results.

The verdict: It depends

So, is eNPS worth it? Ultimately, the answer depends on your company’s culture and priorities. If you’re looking for a way to gauge employee sentiment, improve engagement, and build a stronger employer brand, then eNPS can be a valuable tool.

However, it’s important to be aware of its limitations and use it alongside other methods to gain a comprehensive picture of your employee experience.

Craft your NPS survey with Formaloo: A feature-rich experience

Net Promoter Score (NPS) is a powerful tool for gauging customer loyalty, but creating the survey itself can feel like a chore. Here at Formaloo, we believe it shouldn’t be! Our platform offers a suite of features designed to simplify the NPS survey creation process.

Step 1: Choose the survey format that fits your needs

Formaloo provides flexibility when it comes to building your NPS survey. For a quick and straightforward approach, you can use our Single-step survey format. This option is ideal if you want to capture the core NPS question and get right to the heart of customer sentiment.

However, if you’re looking to gather richer customer feedback alongside the NPS question, our One Question at a Time format is the perfect choice. This format allows you to seamlessly integrate additional questions tailored to your specific needs.

Perhaps you want to understand why a customer gave a particular score, or maybe you’d like to capture specific areas for improvement.

Step 2: Build your core NPS question

Formaloo’s drag-and-drop interface makes building your NPS question a breeze. Simply select the “Score” question type and add the classic NPS prompt: “On a scale of 0 to 10, how likely are you to recommend [your company/product/service] to a friend or colleague?”  

Formaloo then allows you to customize the score messages, ensuring they perfectly match the standard NPS format (0 = Not at all likely, 9-10 = Extremely likely).

Step 3: Supercharge your NPS with optional follow-up questions

While the core NPS question is essential, you can gain even deeper insights into your customers’ perspectives by incorporating optional follow-up questions.

Formaloo makes this process simple. Using conditional logic, you can automatically direct Promoters (customers who gave a score of 9-10) to a question like “What do you love most about [your company/product/service]?”.

This allows them to elaborate on their positive experiences, providing valuable feedback you can leverage to maintain and strengthen customer loyalty.

Similarly, you can direct Detractors (customers who gave a score of 0-6) to a question like “What can we do to improve your experience?”. By understanding their frustrations and pain points, you can identify areas for improvement and take action to address customer concerns.

This targeted approach demonstrates that you value their feedback and are committed to creating a better customer experience.

Step 4: Personalize your survey for a brand-cohesive experience

First impressions matter, and your NPS survey should reflect your brand identity. Formaloo empowers you to personalize the look and feel of your survey to match your brand.  

Change fonts, and colors, and even add your company logo to create a professional and cohesive experience that resonates with your customers. This seemingly small detail can increase survey engagement and encourage customers to participate.

Step 5: Choose your distribution method to reach your audience

Formaloo understands that you need flexibility in how you distribute your NPS survey. We offer a variety of options to ensure you can reach your target audience effectively.

Generate a unique share link and distribute it via email, or social media, or embed it directly on your website.

Formaloo allows you to directly send email invitations to your customer list, simplifying the distribution process and maximizing survey participation.

Finally, you can also embed the survey in your website as an iFrame, Script, or even a chatbot.

Step 6: Leverage Formaloo’s built-in NPS calculator

Formaloo goes beyond just creating your NPS survey. Our platform offers a suite of features designed to save you time and effort while providing valuable customer insights. Here are just a few highlights:

• Automatic NPS calculator: Forget manual calculations! Formaloo automatically calculates your NPS score based on customer responses, freeing you up to focus on analyzing the data and taking action.
• Detailed NPS analysis: Generate comprehensive reports that break down your NPS data by category (Promoters, Passives, Detractors). Identify trends over time, track progress toward your customer experience goals, and make data-driven decisions to improve customer loyalty.
• Branching logic: Take your NPS survey to the next level with branching logic. This feature allows you to show follow-up questions only to specific customer segments. For example, you could display questions about favorite features to Promoters and questions about areas for improvement to Detractors.

The most common NPS survey question types

Here’s a breakdown of how you can structure your NPS survey for richer insights:

1. Start with basic demographics:

Understanding some basic demographics about your respondents can provide valuable context for interpreting your NPS data. Here are some common demographic questions to consider, keeping in mind your specific needs and avoiding overwhelming respondents:

• Age: This can help understand generational differences in customer behavior and preferences.
• Location: Knowing your customer’s geographic location can be insightful, especially for businesses with regional variations in service or product offerings.
• Industry: If you serve multiple industries, understanding the industry of your respondent can help tailor future communication and offerings.

2. Warm-up questions to engage respondents:

Asking a couple of engaging questions before the core NPS question can help warm up respondents and encourage them to participate thoughtfully. Consider open-ended questions like:

• “In your own words, describe your recent experience with [your company/product/service].”
• “What is the main reason you chose to do business with us?”

These questions can provide valuable insights into customer perception and initial impressions.

3. The core NPS question

This is the heart of your survey: “On a scale of 0 to 10, how likely are you to recommend [your company/product/service] to a friend or colleague?”

Remember to use the standard answer scale (0 = Not at all likely, 1-6 = Unlikely, 7-8 = Somewhat likely, 9-10 = Extremely likely).

4. Targeted follow-up questions based on NPS score:

Here’s where your survey gets interesting! Formaloo allows you to use branching logic, automatically directing respondents to follow-up questions based on their NPS score (Promoter, Passive, Detractor).

This allows you to gather deeper insights tailored to each segment:

• For NPS Promoters:
  • Open-Ended: “What do you love most about [your company/product/service]?”
  • Multiple Choice: “What factors most influenced your decision to recommend us?”
• For Passives:
  • Open-Ended: “What can we do to improve your experience and become a Promoter?”
  • Multiple Choice: “What is the biggest reason you didn’t give us a higher score?”
• For NPS Detractors:
  • Open-ended: “What can we do to win back your business?”
  • Multiple Choice: “What was the primary reason for your low score?”

5. Wrap-up your survey with a thank you message:

Thank respondents for their time and feedback. Consider offering a small incentive, like a discount code or entry into a prize draw, to encourage participation.

How to boost the response rate of your NPS survey

A well-crafted NPS survey is only valuable if customers participate. Here are some effective strategies to boost your NPS survey response rate and ensure you get the valuable feedback you need:

Pre-survey strategies:

• Target the right audience: Don’t blast your survey to everyone. Tailor your survey to specific customer segments based on purchase history, lifecycle stage, or recent interactions. This ensures the questions are relevant and resonate with the recipient.
• Timing is key:  Consider the customer journey and send your survey at an optimal time. For example, after a positive customer service interaction or following a purchase could be ideal moments to capture their experience while it’s fresh in their minds.
• Set clear expectations: In the pre-survey email or invitation, clearly explain the purpose of the survey and how long it will take to complete. Let them know their feedback is valued and will be used to improve their experience.

Survey design and distribution:

• Keep it short and sweet: People are busy! Aim for a concise survey that can be completed in 5-10 minutes. Prioritize the core NPS questions and limit follow-up questions to the most crucial ones.
• Mobile-friendly design: Ensure your survey is optimized for mobile devices. A significant portion of respondents will access your survey on their smartphones, so a seamless mobile experience is crucial.
• Personalize the invitation: A generic email is unlikely to grab attention. Personalize your survey invitations with the recipient’s name and reference a recent interaction (if applicable). This adds a human touch and increases the chance of engagement.
• Multiple distribution channels: Don’t rely solely on email. Explore sending your survey via SMS text messages or even embed it on your website or app for easy access.

Send follow-up survey emails:

• Close the loop with detractors: Don’t ignore negative feedback! Reach out to Detractors (customers who gave low scores) to understand their concerns and demonstrate that you care about their experience.
• Share the results: Consider sending a follow-up email summarizing the key takeaways from your NPS survey and outlining any actions you’re taking based on the feedback. This shows customers their voice is heard and valued.

Turn feedback into action

Net Promoter Score (NPS) goes beyond a single number. It’s a treasure trove of customer insights waiting to be unclosed. But how do you translate that feedback into actionable steps that drive real change?

Here’s how to leverage your NPS results to cultivate stronger customer relationships and fuel business growth:

See how to address unhappy customers (detractors)

Detractors (customers who scored 0-6) are a crucial segment to focus on. Their negative experiences can potentially damage your reputation, so addressing their concerns is paramount. Here’s what you can do:

• Close the loop: Reach out to Detractors personally. Thank them for their feedback and express your genuine concern about their experience. Actively listen to their frustrations and identify the root cause of their dissatisfaction.
• Develop an action plan: Based on your conversations with Detractors, develop an action plan to address their specific issues. This could involve offering them a solution, a discount, or simply acknowledging their concerns and outlining how you’ll prevent similar problems in the future.
• Track resolution rates: Monitor how effectively you’re resolving Detractor concerns. Tracking resolution rates over time allows you to measure progress and identify areas for improvement in your customer service processes.

Find ways to make neutral customers happier (passives)

Passives (customers who scored 7-8) are satisfied but not particularly enthusiastic. They might not readily recommend you, but they’re also not actively detracting from your brand. Here’s how to turn them into loyal customers:

• Understand their needs: Passives can offer valuable insights. Analyze their open-ended feedback to identify areas where you can exceed their expectations and turn them into Promoters.
• Offer personalized incentives: Consider offering Passives targeted incentives or promotions based on their purchase history or areas of interest. This can nudge them towards becoming more engaged customers.
• Prioritize customer experience: Focus on consistently delivering a positive customer experience across all touchpoints. This will help Passives feel valued and more likely to recommend you to others.

Learn how to turn happy customers into promoters (advocates)

Promoters (customers who scored 9-10) are your champions! They’re enthusiastic about your brand and are more likely to recommend you to others. Here’s how to nurture these valuable relationships:

• Express gratitude: Thank Promoters for their positive feedback and loyalty. A simple thank you email or personalized message goes a long way in strengthening the relationship.
• Identify promoters’ drivers: Analyze their feedback to understand what they love most about your company. This can help you refine your offerings and messaging to resonate with a wider audience.
• Empower them as advocates: Consider creating a referral program or providing Promoters with resources to easily share their positive experiences with others. This can amplify your reach and attract new customers through word-of-mouth marketing.

By strategically addressing each customer segment based on their NPS score, you can transform feedback into action. You’ll address Detractor concerns, turn Passives into loyal customers, and cultivate a passionate base of Promoters who champion your brand. This, in turn, drives sustainable business growth and positions you for long-term success.

Use the Net Promoter Score survey to grow your business

Net Promoter Score (NPS) isn’t just a metric; it’s a powerful tool for understanding your customers and building stronger relationships. By delving deeper than the single score, you unlock valuable insights that can transform your business.  

You can identify areas for improvement, address customer concerns, and nurture brand loyalty.

Remember, happy customers are your best advocates. By strategically acting on your NPS results, you can turn feedback into action, cultivate a passionate promoter base, and ultimately drive sustainable growth.

In essence, NPS empowers you to Grow Better – by putting your customers at the heart of your business strategy.

Sign up for free today and experience the power of NPS surveys firsthand! Our user-friendly platform makes creating, distributing, and analyzing NPS surveys a breeze.

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