Since it was first discussed in the Harvard Business Review in 2003, the Net Promoter Score (NPS) has been a crucial metric for determining the likelihood that a business will grow. A company’s NPS reveals whether or not customers are willing to recommend the business to a friend or relative, using loyalty levels to measure the customer experience and predict business growth and success.
However, while your NPS is a crucial gauge of customer satisfaction, it doesn’t tell you everything you need to know about your business’s future.
A Net Promoter Score categorizes customers based on their responses to a survey about whether or not they have referred your business. Survey answers fall into three segments:
The NPS is the percentage of promoters minus the percentage of detractors.
For example, if 75% of a company’s customer survey responses reported a nine or 10, and 5% reported a score of six or less, the company would have an NPS of 70.
To ensure a more accurate score, include a large customer pool, and don’t allow the same customer to take the survey twice.
An NPS provides valuable information about your customers’ satisfaction and loyalty levels, but it’s not an all-inclusive metric for business improvement.
The NPS isn’t the only type of business survey that can provide valuable insights. In general, formal and informal survey research will help you understand why customers feel the way they do about your business.
Here are a few other survey types:
The type of survey research you choose will depend on your business’s size and budget.
“There’s a lot of anxiety in the research space about methodology,” Garcia said. However, the method you use isn’t as important as making an effort to speak directly to your customers, discovering how they feel and think about your business. Customer insights can tell you precisely where your business is successful – and where you might need to make changes.
“You don’t want to invest in general insights,” Garcia said. “You want to know who your exact customer base is. What are the things you need to do to optimize from where you are, not just general marketing trends that are divorced from your day-to-day?”
While your NPS doesn’t explain why customers feel the way they do, it’s still a valuable indicator.
Garcia recommends using the insights from survey research to improve your business model. From there, you can gauge the success of any improvements by the changes in your Net Promoter Score.
“One of the biggest points of confusion with NPS is that you don’t want to say your one NPS number,” Garcia said. “You want to see the change in that score over time.”
Survey research tells you how to create loyal customers. How your NPS changes over time shows whether you are gaining or losing those loyal customers, providing a clear picture of how your business is growing.
Knowing those two things, Garcia said, “will put you in the best possible position, regardless of what your NPS metric is day to day.”
In addition to the Net Promoter Score, you can use other tools to measure customer satisfaction or loyalty.
Not all of these scores are helpful for all businesses. Depending on your business’s size and scope, a straightforward measure like customer satisfaction may prove more helpful than NPS. Alternatively, you may benefit from picking your own variables to calculate and track Customer Health Scores.
a href=”/6174-customer-loyalty-programs.html”>Customer loyalty programs reward customers with perks while providing your business with valuable data for opt-in marketing campaigns.
Your company’s Net Promoter Score measures its favorability among customers and how likely customers are to recommend your business to friends and family. Some market researchers believe NPS is obsolete and that newer alternatives are more accurate and helpful. However, NPS can still help business owners and managers track customer satisfaction over time and make crucial improvements to boost goodwill.
Katharine Paljug contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.