Customer satisfaction is vital to the success of any business. Getting new customers is expensive, and it costs five times as much to attract a new customer as it does to keep your current ones. Building a business that has a solid customer base of satisfied customers is vital to your success.
Yet, measuring customer loyalty is not always easy. How, exactly, can you measure customer satisfaction? Net Promoter Score, or NPS, can be a helpful way to do just that.
NPS is a metric that measures how likely a customer is to recommend your product to someone else. Invented by Fred Reichheld of Bain & Company in 2003, this metric has become invaluable to today's businesses. Learning how to calculate and interpret this score is an important way to evaluate the success of your business. Here is a closer look at how you can calculate and use this metric for your success.
Table of Contents
- What is a net promoter score (NPS) and what does it actually measure?
- How to calculate your company's NPS
- How to interpret NPS results
- 3 ways to calculate net promoter scores
- Best practices for NPS effectiveness and accuracy
What is a net promoter score (NPS) and what does it actually measure?
NPS is a good tool to help you calculate the quality of your customer experience 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? If you have a high level of brand loyalty, customer satisfaction, and overall customer service, you will have happy customers. These are the types of things that lead customers to become “promoters” of your brand.
This may seem like a simple metric, but it's actually quite a bit more complicated. Gathering this data and plugging it into an NPS calculator is a bit more complex than you might think. That's why most businesses need to use a formula to determine their NPS score.
Today's companies have many customer support metrics they can follow, and NPS is one of them. So how important is this metric? 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%. Clearly, these customer experience professionals knew the importance of NPS.
How to calculate your company's NPS
NPS scores are very important for measuring the overall quality of your customer support and interactions. So, how do you calculate the NPS score for your business? First, you must ask the NPS question, which is:
- "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, “extremely likely” response, 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.
To calculate your NPS, use this formula:
Total % of promoters - the total % of detractors = 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.
To understand how to use this formula, you must first understand the role that the three different types of survey respondents play in the 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 highly 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. In fact, they may even detract from your business by turning people away from you.
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.
How to interpret NPS results
Calculating your NPS score is not difficult once you understand the three types of responses. But how can you interpret your results? What is a good net promoter score, and what is a bad one?
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 are indicative that your business may struggle to grow. A score of 0 to 30 is acceptable, but anything above 30 is best.
3 ways to calculate net promoter scores
Before you can interpret your NPS score and use it to help you create a better customer journey, you must find out what the score is. The formula is not complicated, but tabulating all of the responses you get from your customers can be. Here are some ways you can calculate this metric to better understand your customers and their likelihood of promoting your business.
Create an Excel or Google Sheets NPS spreadsheet
If you are well-versed in using 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:
- Use 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:
Utilize a survey automation tool with NPS capabilities
Using spreadsheets and calculators requires a lot of work on your part. You have to manually calculate survey responses and input them into these tools, which takes much of your valuable time.
The fastest option may be to use a survey automation tool that integrates with NPS calculation tools. Gorgias offers its type of integration. Our survey automation tool integrates with several NPS calculators to allow you to quickly and easily see your overall NPS. Through this integration, you gather customer satisfaction surveys using Gorgias, then you integrate them into your NPS tool to calculate your NPS.
Gorgias has several NPS calculator integrations for your consideration. These include:
To see how this could simplify the NPS calculation process for your business, learn more about how Gorgias helps you collect customer satisfaction surveys.
These integrations and our easy-to-use helpdesk program work to improve NPS for many ecommerce businesses. One of our customers, Bagallery, saw their NPS go from 19 to 41 after partnering with Gorgias. Another client, Comme Avant, now maintains a nearly perfect NPS after switching to Gorgias. Your ecommerce business could have similar results with a streamlined, simple customer support software platform, and our survey templates and NPS calculator integrations make it easy to track your results.
Best practices for NPS effectiveness and accuracy
Knowing your NPS score is only helpful if it is an accurate score, and you use it effectively to grow and improve your business, overall customer retention, and referrals. Below are some best practices to implement to make these tools as helpful as possible for your growth.
Decide whether you'll use a relationship or transactional survey (or both)
First, the type of survey template you use is important. There are two main types to consider: 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.
Transactional surveys focus on a particular transaction, usually a purchase in the case of an ecommerce survey. The survey questions focus on that particular transaction, not the overall customer experience throughout the lifetime of their relationship with you. This type of survey looks at how well your company handles that particular type of interaction.
Most of the time, you need to start with relationship surveys. You need to know that you have loyal customers who will serve as promoters for your brand. Collect email addresses from your customers, and then use those to send out surveys on a regular basis.
After you have relationship surveys in place that help you measure your NPS, you can send transactional surveys to measure particular types of transactions within your business. This will help you improve your business function, which in turn will improve the customer experience. Focus on transactional NPS surveys for transactions that have the biggest impact on your customer loyalty.
Limit the numbers of questions you include as part of the NPS survey experience
It's tempting to ask a lot of questions when you have the opportunity to survey your customers, but avoid this temptation. Even though you want to get a lot of data about the customer's NPS response (so you can improve it if it's negative), too many questions will overwhelm the customer, and you may not get an accurate NPS question response.
Too many questions may even cause the customer not to do the survey at all. Since the average survey response rate is just 33%, you need to do all you can to increase the chances that people will actually respond to your survey and give you the data you need.
How many questions should you have? According to Delighted, you should focus on just two questions. This will give you a better response rate, so your NPS score is going to be accurate. Remember, your goal is to get the customer to do the survey, and the fewer questions you ask, the better your response data will be.
If you need more than two questions, make sure the survey remains short. Have no more than five questions total. If you need more than that, break them up into different surveys. Remember, the NPS question is the single question that means the most, so don't add too many other questions to the mix that could confuse your customers.
Let customers answer an open-ended question right after they provide their score
You can get additional contextual feedback about your score by asking an open-ended follow-up question after you ask the NPS question. 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 data on what did or did not please your customers.
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 on future transactions.
Just get started and aim for statistically significant sample sizes later on
It's easy to get caught up in the how-to and never actually launch your NPS survey. While you do want an effective survey, the key point is to get one. Even if you only have a small amount of data at first, you will have some data. You can then optimize your survey to get more responses.
Start with the relationship survey, and send it to all of your current customers. Then, after you start getting those surveys back, tweak your survey and send it to different segments of your customer base. Continue tweaking by adjusting the frequency and wording until you are getting a large number of survey responses. Don't wait to start until you have a perfect system — you'll lose valuable data if you do.
Optimize the days and times you send your surveys
Experiment with the timing of your survey. There is no cut-and-dried answer to what time or day works best, but you may find that you get more responses if you send out your survey at specific times of the day or week. The answer to timing will depend on your specific customer base, so experiment until you find the sweet spot for this.
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 template. Send it 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.
Learn more about how Gorgias helps ecommerce companies collect and improve NPS scores
A good NPS score means your customers are happy, and they are spreading the news about your product via word of mouth. Gorgias is a customer support tool that can help you collect NPS surveys and calculate your NPS score. Our survey integrations and automation with tools like Delight, Reveal by Omniconvert, and Simplesat can make the NPS calculation simple and easy to manage. We also help companies improve their customer interactions to improve their overall NPS score.
Are you ready to see similar results? Learn more about Gorgias' customer support tools and survey templates, and see how easy it can be to learn what your customers think about your ecommerce business.