It is possible to calculate how much you bill in a month, how many customers you gain in a given period, and how many contacts you get every day: but is there a way to evaluate how much your buyers appreciate your brand? The answer is yes, with the NPS, the acronym for Net Promoter Score. This score is based on a very simple calculation. Still, it starts from anything but trivial assumptions: it comes from an in-depth study of companies’ methods of approach and attraction, which has seen word of mouth impose itself on competing alternatives with a wide gap.
Why has word of mouth – an everyday practice that companies cannot control – had this success, which is still growing, compared to sophisticated engagement techniques studied at the table? The answer is disarming: because it is spontaneous. An advertisement may or may not be sincere – the buyer is not given to know – but it will always have the stated purpose of selling. What, on the other hand, does a positive comment from a customer represent?
It means that he has enjoyed your service, is satisfied with what he has purchased, and would recommend the experience to anyone who feels the same need/desire that he, too, had. But above all, he won’t be making that kind of speech for advertising or to promote your brand: he will be doing it in a disinterested and, therefore, sincere way, without ulterior motives. And that’s the best review a prospect can get in preparation for a purchase.
What Is NPS?
NPS can be seen as your customer retention rate: a high NPS will mean that most of your customers will be more than satisfied with your service or product, solely dependent on their judgment of you. More precisely, this metric evaluates the effectiveness of the word of mouth that your buyers can generate. Therefore it puts all buyers on the same level – regardless of how much they have spent, spent, or will spend in their customer history.
The Different Types Of Customers
Customers are not all the same: it is true everyone buys, but their contribution to your company’s growth does not depend only on the revenue they generate. Their approach to your service is what matters most, dividing them into three classes:
- Promoters: those who express themselves positively towards your service. They don’t just buy but actively contribute to the growth of your business thanks to positive word of mouth;
- Detractors: are those customers who buy from you but are unsatisfied with the service. They are risky buyers who could change suppliers at any moment: moreover, if someone were to contact them for information about you, they would not spend their best words;
- Passive: these buyers buy from you without being enthusiastic about the good you provide them, but they don’t even complain: for your business, they represent nothing more than simple turnover, but they can potentially evolve into promoters or degenerate into detractors, so it it is advisable to invest in their shopping experience.
The Formula For Calculating The NPS
Now that we have useful data let’s see how to calculate our NPS. First, you want to count every organization’s dynamic clients and request that they rate their fulfillment with your administration, going from 0 to 10. Send every one of your contacts named clients a basic inquiry: “On a size of 1 to 10, what amount could you prescribe our organization to a colleague of yours?”. When every one of the scores has been gotten, given to them, you can separate your clients into the three classifications recorded previously:
- Score from 9 to 10: promoters, therefore, are fully satisfied with how you managed – and are working – their shopping experience
- score from 7 to 8: passive, therefore not unbalanced towards one or the other pole
- Score from 0 to 6: detractors, therefore not happy with how they were treated
Regardless of whether liabilities have no worth in the client devotion proportion, they ought to be kept in the situation, as we want the level of advertisers and doubters – and the number of liabilities will impact verifying that. Once obtained, remove the group of allies from the portion of doubters, and the outcome will be your organization’s NPS score. % promoters – % detractors .
For example, let’s say your customer database is 60% promoters, 30% passives, and 10% detractors: we ignore the passive percentage and proceed with the subtraction. % promoters – % detractors —> 60 – 10 = 50. Therefore, the NPS of your company will be 50: companies, to consider the index positively, generally aim for an NPS between 50 and 70.
It is important to specify that the NPS is not a datum to be considered absolute: in the voting, each customer is different, and a promoter may score 8 – considering it an excellent score – just as it is possible that a passive scores 6 – giving “enough” at a service he doesn’t deem terrible, but it’s not spectacular either.
You should be interested in the approximate percentage to get a rough idea of your company’s performance: essentially, it’s important to fall within the 50-70 range or be above it, and an alarm bell should ring if the final score is below. NPS can be seen as the theoretical word-of-mouth effectiveness of your brand: the more promoters you have, the more effective it will be.