At the Nashville Conference in 2004, Armand Feigenbaum, an expert in quality control, stated that: "quality is what the customer says it is". But how can we know what the customer considers quality in our brand? And above all, how can we measure it? Let's see it in this post, are you ready?
The NPS ( Net Promoter Score) is a system and a universal indicator that brands have adopted to measure customer satisfaction and, therefore, loyalty towards the company. The first appearance of this term was in 2003 in the article "The one number you need to grow" written by Frederick F. Reichheld reflecting on how to maintain customer loyalty to make our company grow.
As a measurement system, what the NPS allows us to know is the probability that a user will recommend our brand to other people or the degree of satisfaction they have with us after having made a purchase of one of our products or services.
The data needed to calculate the NPS is obtained through a simple survey that is carried out to customers, online or offline, and which has to contain some essential questions such as:
These questions will be accompanied by a scale from 0 to 10 on which the customer will be able to indicate the number they want depending on the probability of this happening, being 0 no probability and 10 highly probable. This will help us to calculate our NPS and, therefore, to know the degree of loyalty and satisfaction of our customers.
Moreover, these questions will also be very important for the growth of our brand since, according to a Nielsen study, there is an 83% probability that a user will buy a product or contract a service only because a relative has recommended it to them. This is why the NPS is an essential indicator, especially for those companies that want to grow thanks to the already well-known word-of-mouth system that has helped to generate more sales on so many occasions.
Once we have obtained the responses to our quality survey, it is time to calculate our NPS, but how can we do it?
Although it may seem complicated, the result is based on a simple calculation that will help us rank our customers.
When Reichheld invented this term, he realised that, depending on how customers responded to the likelihood that they would recommend our brand to others, three categories of customers could be distinguished:
Now that we know the different categories in which we can place our customers, it is time to make the calculation. The formula is very simple, it is a matter of converting the results of promoters and detractors into percentages, ignoring those of passive customers.
For example, let's say your brand conducts a quality survey of 1,000 people and you get the following results:
Knowing that we do not have to count the responses of passive customers, we will count the 400 promoters and the 200 detractors. To obtain the percentage of each of the groups, we will simply divide the number of people in each group by the total number of respondents. That is, if there are 400 promoters out of a total of 1,000 people, we will divide 400/1,000 and we will obtain that the promoters form 40% of our responses. In the same way we will do the same for the detractors, dividing 200 people by a total of 1,000 (200/1,000), which will lead us to know that this group is 20% of our responses.
So, subtract 20% of our detractors from 40% of the promoters, and we get an NPS of 20%. Now, how do we interpret whether this is a good or a bad result?
It is important to know that an NPS of 100% means that all our customers are promoters, which would be the best possible result. If we obtain a -100% it means that all our customers are detractors, which would be a bad result. Obtaining 50% or more is an excellent result and obtaining between 0% and 50% is also a good result for our brand.
After obtaining the results of our NPS, we must keep in mind that the Net Promoter Score is a fundamental tool to guide the path of our company and to know how well or badly we are doing with our customers.
We are now going to look at some tips that will help us to improve our NPS results and to know how to better interpret customer needs:
In short, and as we have seen throughout the post, there are many advantages of the NPS for our brand and especially to help us understand the relationship of customers with us. Finally, we will break down some of the best advantages of using the Net Promoter Score (NPS) in our company to increase our sales and to know the satisfaction of our customers: