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The Net Promoter Score® (NPS) is a universal customer loyalty metric that measures how well a brand or organisation is succeeding in creating satisfied, loyal audiences. Though it may seem complicated at first, the following blog breaks down the basics of NPS calculation, interpretation and use.
1. Gathering data from the “ultimate” question
To determine your NPS, one key question is asked: how likely are you to recommend (this organisation) to a friend or colleague? Respondents will choose a number from a 0-10 scale, with 0 meaning not likely at all, and 10 meaning highly likely. Based on the responses, the following groups are formed:
- Promoters score 9-10: willing to recommend and can fuel growth through word of mouth
- Passives score 7 and 8: satisfied but unenthusiastic
- Detractors score 0 to 6: unwilling to recommend and may talk badly of the bad/product/service
2. Calculating the NPS
The formula to calculate your NPS is pretty straightforward:
NPS = % Promoters - % Detractors
By subtracting detractors from promoters, companies are given a simple measure of organisational performance from the audience’s perspective. Why aren’t passives included in the calculation? This group is unlikely to influence new audiences in any way, whereas detractors and promoters generate negative and positive influence.
3. Interpreting your results
Now that you’ve calculated your NPS it’s time to figure out where your brand stands in terms of audience loyalty. The lowest possible score to yield is -100, indicating that all your respondents are Detractors. Alternatively, the high score of 100 indicates all respondents are Promoters. While these binary net promoter scores are unlikely to arise in reality, scores are universally interpreted as:
- Negative scores (less than 0): Needs improvement
- Positive scores (greater than 0): Good
- Scores above 50: Excellent
When interpreting your NPS it is important to remember that your score is not one size fits all. Your NPS can vary depending on industry, geography, your organisation size and what you produce. As with many metrics, the more data you gather on your NPS – across time and programming – the more information you will be able to glean about your relationship with your audiences.
4. The benefits and use of a NPS
- Universally relevant: The NPS is in no way restrictive – it can be calculated to measure loyalty of a brand, product, service or event. The scoring system of -100 to +100 is easy to understand therefore valuable for all employees to know.
- Benchmark against competitors: The NPS is globally one of the most popular customer loyalty metrics – this makes it an ideal tool for benchmarking against competitors in your industry. Keep in mind, an NPS of 10 may considered great in some industries and poor in others. What is your industry average and where do you stand?
- Tracking performance over time: The more frequently you survey your audience, the clearer picture you’ll have of their loyalty and its development over time. It could also help you see whether changes in your NPS are influenced by seasonal factors.
While the NPS is a universal metric with great evaluation potential, do keep in mind - it should ideally be interpreted in light of other data and metrics for the best global perspective.
5. Using the NPS
If you’re interested in including Net Promoter Score in your Culture Counts evaluations please don’t hesitate to contact our client support team who will be able to assist.
Interested in what capturing the right kinds of data can do for your organisation? Get in touch here.