Net Promoter Score (NPS)
Lower is better
How is Net Promoter Score (NPS) calculated?
To arrive at your NPS, subtract the percentage of users that are detractors from the percentage of users that are promoters. Passive users aren't included in the calculation since they don't feel either way strongly.
What is Net Promoter Score (NPS)?
NPS, or Net Promoter Score, measures how likely a user or customer refers to your product or service to another user or customer. NPS scores are typically on a scale from 0 to 100, with higher values being more desirable.
You've probably seen in-app popups or email surveys that pose the question:
On a scale of 0 to 10, how likely are you to recommend us to a friend?
Based on the responses from these surveys, organizations can calculate their NPS score. Each response is categorized into one of three buckets:
Detractors: submitted a score between 0 and 6
Passive: submitted a score of 7 or 8
Promoters: submitted a score of 9 or 10
Detractors are more likely to submit negative reviews since no one wants to use a product they've heard bad things about; this could negatively impact your acquisition efforts. Passives are generally indifferent about your product or service, a positive experience with your product could convert these users into promoters, or your competitor could win them over.
Ideally, all your users would be promoters. However, not every product will satisfy the needs of all its users.
So what is a "good" NPS score?
The benchmark NPS for your organization will vary based on what sector or industry your business is in. For example, according to The American Customer Satisfaction Index, the average satisfaction with life insurance companies is lower than that of breweries 🍻.
Why is Net Promoter Score (NPS) important?
NPS will greatly affect your ability to acquire new customers
No one wants to purchase something with lots of negative reviews, or something they heard was bad. Your money on sales and marketing won't go very far if no one is willing to purchase your product or service.
On the other hand, if you have a high NPS, that often means that you'll get marketing organically through word of mouth. This means having lower marketing spend for a higher return on your investment.
NPS will affect the churn rate of your existing customers
If your users aren't getting enough pros from your product to justify the cons, they will cancel and switch to a competitor. Additionally, it is much cheaper to retain customers than to acquire new ones. A higher NPS means that your users are more likely to stick around.
Start tracking your Net Promoter Score (NPS)
Create a KPI for Net Promoter Score (NPS) to monitor it over time and an OKR to track your impact against it in Commonality.