Businesses run on happy customers. Happy customers generate repeat business, share positive reviews, and refer others to your brand. Plus, happy customers are cost-effective: It costs five times more to get a new customer than it does to keep your current ones around.
Net promoter score (NPS) measures how likely a customer is to recommend your brand to someone else. Invented by Fred Reichheld of Bain & Company in 2003, this metric is a surprisingly good indicator of a company’s success. Companies with high NPS for their industry grow revenue 2.5 faster than their competition, according to research from Rob Markey, founder of Bain & Company’s Customer & Marketing practice.
Want to evaluate the success of your customer experience, product, and overall business? You should measure NPS. Here is a closer look at NPS, including how to calculate and benchmark your score.
What is net promoter score (NPS) and what does it measure?
Net promoter score (NPS) is a metric to calculate the quality of your customer experience across every channel based on whether or not your existing customers are likely to recommend your business to someone else.
The net promoter score for your business is important because it is a direct reflection of how well your business satisfies your customers. It also shows the number of promoters you are creating through your business. It allows you to quantify the sentiment of your customers, so you can better serve and satisfy them.
So what, exactly, is NPS measuring? Most directly, it indicates how much of your customer base would recommend your product to others. However, people treat NPS as a metric for brand loyalty, customer satisfaction, overall customer service, and happy customers.
NPS is one of the most common metrics to measure your brand’s customer experience and growth potential. Lumoa, a customer survey company, performed a survey of customer experience directors. Of the respondents, the majority (64.5%) indicated NPS to be the most important metric to follow. Customer satisfaction was second at 43.6%, and churn rate came in third at 42.7%.
How to calculate your company's NPS
NPS scores are very important for measuring the overall quality of your customer support and interactions. Fortunately, collecting NPS is relatively straightforward — it all boils down to one simple question:
"On a scale of 0 to 10, how likely are you to recommend our product to someone else?"
On this scale, 10 is the highest response: Customers who choose 10 are “extremely likely” to recommend your brand. And 0 is the lowest, “not likely at all” response. When you ask for customer feedback with this question, their ratings will group them into one of three categories: promoters, passives, and detractors.
Let’s run through each of those categories before we put them all together with the NPS formula.
The promoter role in the NPS formula
A promoter is a customer that responds to the NPS survey question with a 9 or a 10. They are highly likely to recommend your business to others. These customers are likely to bring you new customers because of their recommendations. The majority of your referrals will come from these satisfied customers.
The detractor role in the NPS formula
A detractor is someone who gives a 0 to 6 response on the survey. These are usually unhappy customers who are not likely to recommend you to others. They may even detract from your business by posting bad reviews and warning people to stay away from your brand.
The passive role in the NPS formula
A passive is someone who responds with a score of 7 or 8. These are part of your customer base, and they may remain loyal customers, but they are not happy enough to recommend your business to a large number of people. They do not impact your NPS.
The formula to calculate NPS
The formula for net promoter score is: Total % of promoters - the total % of detractors = NPS
Let’s walk through that formula step-by-step:
1) Separate your survey results into promoters, passives, and detractors
2) Determine what percentage of the total number of responses are promoters, and what percentage are detractors — leave passives aside for now
3) Subtract the percent of detractors from the percent of promoters.
That number, which should range from 1 to 100, is your NPS.
Here is an example: You have a survey that comes back with 60% of the respondents being promoters, 10% of the respondents being detractors, and 30% of the respondents being passives. This is what your NPS calculation would look like:
60% promoters - 10% detractors = 50 NPS
In this scenario, the NPS score is 50. The NPS is always an integer, never a percent.
How to interpret NPS results
Calculating your NPS score is not difficult once you understand the three types of responses.
A perfect NPS would be a score of 100, but you can score as low as -100. A score below zero is considered poor because it means that you have a larger number of detractors than promoters. Negative scores indicate your business may have a high churn rate and will struggle to grow. A score of 0 to 30 is acceptable, but anything above 30 is best.
Also, your overall NPS is only one piece of the puzzle. Once you know how to collect survey responses and calculate your score, you can drill down to find out which factors have the greatest impact on your score.
For example, NPS may vary across your products. If so, you can start investigating whether the low-scoring products are low-quality, have misleading marketing, or something else entirely. Likewise, NPS may vary depending on the customer service channel customers use. If that’s the case, you may want to bolster your omnichannel customer service offering.
What’s a good net promoter score? NPS benchmarks across industries
Of course, your score doesn’t mean much without larger context. Retently’s 2022 NPS benchmark provides great data on the average NPS across industries:
- Ecommerce: 62
- Retail: 61
- Financial services: 56
- Communications and media: 29
- Internet software and services: 4
That said, don’t lose faith if your NPS is lower than the numbers above. Every brand is different, and every brand starts somewhere. The most important project is to continuously improve your NPS, regardless of where you stack up against competitors.
3 ways to collect and calculate net promoter scores at scale
The formula itself is simple enough, but you might want to create a system to continually process your score. We have three recommendations:
1) Create an Excel or Google Sheets NPS spreadsheet
If you’re comfortable with Excel or Google Sheets, you can set up a spreadsheet that will perform your net promoter score calculation for you. To do this, you will need to follow these steps with the COUNTIF function:
- Define promoters using =COUNTIF(R:R,”>=9″), detractors with =COUNTIF(R:R,”<=6″), and passives with =COUNTIF(R:R,”=7″) +COUNTIF(R:R,”=8″)
- Copy and paste the customer responses into the column, and Excel or Google Sheets will count them for you
- Add the NPS equation into the spreadsheet using this formula: =(Promoters - Detractors)/Responses * 100
Plugging these formulas into your spreadsheet allows you to keep tabs on your NPS in real-time, updating it as you need to when new survey responses come in.
Use a free NPS calculator tool
If you're not great at using Excel, you can also use free NPS calculator tools that are available online. To use one of these, all you need to do is count up the customer responses on their surveys and put them in the NPS calculator platform. Many survey tools allow you to export the scores easily to put them into a tool.
Some good options for free NPS calculation include:
Use a survey automation tool with NPS capabilities
Before you calculate your score, you’ll have to send a survey to customers to collect their responses. Some survey tools have NPS calculation built in.
If you use Gorgias as your customer service platform, you can easily integrate a survey automation tool to easily collect and calculate responses like:
We love and recommend all these tools, but as an example let’s take a look at how Delighted and Gorgias work together. Delighted helps you spin up an automated NPS survey — one of many survey templates they offer. Then, you can automatically send out the survey to customer segments on multiple channels via Gorgias:
Best practices for NPS effectiveness and accuracy
An accurate NPS score helps you grow your business, overall customer retention, and referrals. An inaccurate NPS may point you in the wrong direction. Accuracy doesn’t just mean you used the formula correctly — it also means you’re measuring the full breadth of your customer base and customer journey.
Below are some best practices to implement to make these your NPS as accurate and helpful as possible.
Decide whether you'll use a relationship or transactional survey (or both)
First, the type of survey you use is important. There are two main types to choose between: relationship surveys and transactional surveys.
Relationship surveys try to measure a customer's brand or company loyalty. They ask questions about the overall customer experience and how satisfied the customer is with your company. You will send these to your customer base at specific intervals to help you evaluate the quality of your customer experience and support.
Transactional surveys focus on a particular transaction — for ecommerce, this is usually a purchase. The survey questions focus on that particular transaction, not necessarily the overall customer experience. This type of survey may give you better information about the specific product purchased, though it can also skew up or down if the customer contacted customer support.
Most of the time, you’ll start with relationship surveys. Before you drill down to specific products and transactions, it’s helpful to benchmark your customers’ overall sentiment, loyalty, and promoter status.
If you don’t have a helpdesk, you can use standalone NPS software to start collecting contact information and sending surveys. But if you have a helpdesk like Gorgias, you’ll have an easier time automating your NPS surveys with one of the NPS survey tools listed above because your helpdesk already has customer contact information and can automatically send surveys after purchases or customers service interactions.
Limit the number of questions you include as part of the NPS survey experience
When you decide to contact, you may be tempted to ask as many questions as possible to maximize the insights you receive. We get it; we love customer insight, too. However, response rates for NPS surveys are low — around 20% — and customers are even less likely to respond to longer surveys.
You’ll have higher response rates if you focus your NPS surveys on two questions:
- On a scale of 0 to 10, how likely are you to recommend our product to someone else?
- Tell us why you selected that score
Let customers answer an open-ended question right after they provide their score
Like we said above, you should follow up after a respondent gives you their score to understand why they answered that way. If you leave the question as optional, it won't impact the number of NPS questions you get back, but you may get some important qualitative data from customers who choose to fill out the open-ended question.
Open-ended questions require more than just a "yes" or "no" response. Here are some examples of open-ended questions that work well:
- What disappointed you about your experience?
- How could we improve your experience?
- What do you like the most about our product/service?
Make this question about the customer, using plenty of second-person pronouns, and let them have an open forum to add a response. Use the information you gather to help you improve your customer satisfaction in future interactions.
Just get started and aim for statistically significant sample sizes later on
It's easy to get caught up in details and never actually launch your NPS survey. While you do want an effective survey, don’t let perfect get in the way of done. Even if you only have a small amount of data at first, you will have some data. NPS surveys are not one-and-done; you can optimize your next survey to get more responses.
Start with the relationship survey, and send it to all of your current customers. Then, after you start receiving responses, tweak your survey and send it to different segments of your customer base. Continue tweaking the frequency, wording, and targeting until you are getting a statistically significant number of survey responses.
Don't wait to start until you have a perfect system — you'll lose valuable data if you do.
Optimize when you send your surveys
Experiment with the timing of your survey to maximize the total number of respondents. We’re not aware of any universal best practice for the time of day and day of the week to send out NPS surveys. The timing will depend on your specific customer base, so experiment until you find the sweet spot.
Some survey automation tools, like those mentioned above, will send surveys in response to customer actions. For example, a customer could get a survey a few hours (or days) after they make a purchase or contact customer support. This is a great way to ensure you target customers who are actively engaged with your brand.
Test your survey before you send it out to customers
Finally, make sure you test your survey in-house before you send it to actual customers. There is nothing worse than a poorly worded, poorly functioning survey. Send a test survey to people within your organization first, and make sure it gets to their inbox and not the spam folder.
What might trigger a spam flag in the invitation email for your survey? Here are some things to avoid:
- All-caps in the subject line
- Too many exclamation points
- Words like "act now," "free," and "urgent matter"
- An image with little text in the email body
- Too many font sizes, colors, and types
Send the invitation email to people in-house, and make sure everything works. The email should open, be easy to read, work on multiple browsers and email programs, and make sense to the reader. Take feedback from your team to tweak the email and ensure the survey has the best possible chance of getting read and responded to once it reaches your customer.
Create a process to handle low NPS scores
The primary purpose of NPS is to give you an overall impression of brand loyalty. Another benefit is to identify — and fix — low-NPS interactions as they happen.
We recommend identifying some of the top reasons for low scores and implementing a system to quickly respond to incoming low scores. In Gorgias, for example, you can set up an automated Rule to automatically create a ticket for incoming NPS scores and assign low NPS scores to a dedicated agent.
As your team grows, you can even dedicate agents to each common issue: damaged products, delayed shipping, etc. Gorgias’ intent detection automatically analyzes tickets to identify the root cause of the issue and, combined with Rules, can send each issue to a specialized agent:
Treat those flagged low scores as priority tickets and establish a suitable solution for each reason. For example, you could send a gift card to customers who receive a late or damaged product.
Some of these conversations may be sensitive and difficult, especially among VIP customers. So, we recommend activating phone support as a last line of defense for customers who have a negative experience.
Raising your NPS is one of the revenue-generating tactics from our CX-Driven Growth Playbook, which is based on research of over 10,000+ top ecommerce brands. Check out the playbook for 17 more actionable tips to drive revenue by improving your CX.
Don’t stop at NPS: Also measure customer satisfaction (CSAT) score
Net promoter score is a rich metric, but it’s not the only — nor necessarily the best — way to gauge customer loyalty. One issue is the premise of the survey itself: Just because a customer might promote your brand doesn’t mean they’ll stay loyal. A customer might recommend your product to a (wealthy) friend, but choose not to purchase again because your product is too expensive for them.
We recommend complimenting your NPS efforts by measuring customer satisfaction (CSAT), especially to gauge the performance of your customer support team. Whereas NPS helps you understand the potential for referral-based growth, CSAT asks about customer loyalty more directly: How satisfied are you with the help you received today?
If you use Gorgias, you can automatically send customer satisfaction surveys after closing a conversation with a customer:
This information will be displayed in future conversations to give the next agent context about this customer’s past experiences with your brand. Plus, you can zoom out to get a sense of CSAT across your entire customer base with the platform's customer satisfaction dashboard:
Data from our CX-Driven Growth Playbook indicates your CSAT and revenue are linked. For example, raising your CSAT from 4/5 to 4.9/5 can raise your overall revenue by 4%.
Want to get a better sense of your ecommerce business’s overall performance with metrics like conversion rate, acquisition costs, and lifetime value? Check out our guide to ecommerce KPIs.
Want to zoom in on your customer service department’s performance with metrics like NPS, CSAT, and support performance score? Check out our guide to evaluating customer service.
Learn how Gorgias helps ecommerce companies measure and improve key metrics
A good NPS score means your customers are happy, and they are spreading the news about your product via word of mouth. Gorgias helps ecommerce brands improve their customer experience to drive customer loyalty, referrals, and revenue.
And with Gorgias, NPS is only the tip of the iceberg for reporting and analytics. You have access to reporting dashboards like our Support Performance dashboard, which combines many key customer service metrics, and our Live Statistics dashboard, which shows up-to-date information about each agent's performance.
Sign up for a free trial to see Gorgias' powerful tools for reporting, analytics, and omnichannel customer support.