We all know him: the Net Promoter Score (NPS). Companies around the world use the metric to evaluate the customer experience, the results influence strategic and financial investments, and the NPS enables organizations to benchmark themselves against competitors.

The NPS was created more than a decade ago by Fred Reichheld, Bain & Company and Satmetrix. The goal was to find a metric by which companies could measure customer loyalty and identify promoters who could be ambassadors for the company.

The NPS is a proven measure of customer loyalty and helps identify loyal customers that you can use as an ambassador.

What does the NPS entail?

The Net Promoter Score (NPS) is a metric used to measure the loyalty of your customers. The score is calculated based on the answer to one question: “How likely are you to recommend our company/product/service to a friend or colleague?”

Respondents are divided into three categories: promoters (9-10), passives (7-8), and detractors (0-6). The NPS score is the percentage of promoters minus the percentage of detractors.

How do you calculate the NPS?

Calculating your company’s Net Promoter Score is easy.

You’ve probably received an email from a company asking “is it likely that you would recommend our company”?

So that’s the “NPS question.

Simply ask customers how likely they are to recommend your company/product/service to a friend or colleague on a scale of 0-10 and then subtract the percentage of critics from the percentage of promoters.

The case you are left with next is your NPS.

What is a good NPS score?

The NPS score ranges from -100 to 100. A score of 0 is considered neutral, while anything above 50 is considered good. Scores below 10 are considered poor.

Interpreting the results of your NPS calculation

A high NPS indicates that you have many customers who are satisfied with your product or service and are willing to recommend it to others. Thus, they are more likely to rely on word of mouth.

Conversely, a low promoter score means you have a lot of dissatisfied customers and you have some things to improve.

The benefits of measuring NPS

Regular NPS measurement has a number of benefits:

• NPS allows companies to compare themselves to their competitors.
• NPS is a proven measure of customer loyalty and helps identify loyal customers who you can in turn use as ambassadors.
• The NPS is easy to calculate and understand.
• NPS scores range from -100 to 100, making it easy to track progress over time.
• A high NPS score indicates that you have many customers who are satisfied with your product or service and are willing to recommend it to others, which in turn can lead to growth of your business.

The power of the NPS

Word of mouth is a powerful marketing tool that can help companies improve their NPS. When customers are satisfied with a particular company, they often tell their friends and family about it.

The NPS helps companies track how likely customers are to recommend them to others. This opinion can be used to improve marketing strategies and increase the number of customers who have heard of the company through word of mouth.

What are the limitations of the NPS?

NPS can be a valuable tool for companies looking to improve loyalty. However, there are a few things to keep in mind when using NPS as a measure of customer satisfaction. Accordingly, Gartner predicts that by 2025, more than 75% of organizations will abandon NPS as a measure of customer service success.

Here are five reasons why NPS may not be as valuable as it once was

Disadvantage 1: NPS takes into account factors outside customer service

The NPS does not provide useful insights specifically for customer service at all, because it is your customer’s response to all factors in the customer journey. This means that your customer also includes the price or quality of a product in his assessment.

Customer service managers responsible for the Voice of the Customer (VoC) often already capture the results of CX metrics in their plans.

These results should provide them with actionable insights into the successes and failures of the customer service journey that are within their control, or else you will end up with noise on the line.

Disadvantage 2: The NPS is not clear enough for customer service agents

For your agents to align their actions with strategic priorities and be willing to put in the effort to achieve goals, they need to understand how to achieve those goals. And they must be motivated to do so.

However, the NPS does not clearly state what actions to take to positively influence it. The consequence? Agents have a hard time interpreting how the NPS is related to their performance and really have no idea what to do to improve it.

You can imagine that is very frustrating.

Other CX metrics, such as customer satisfaction (CSAT), the Customer Effort Score (CES), and the Value Enhancement Score (VES), help customer service organizations uncover the root causes of success and failure.

This in turn leads to more involvement from your agents . If your agents understand how their performance makes a difference and positively impacts the customer experience, they are more likely to repeat positive behaviors.

Disadvantage 3: The NPS wastes time and resources

When evaluating NPS results, you are expected to come up with an accountability and action plan to continue strong performance and improve poor performance.

But the NPS’s lack of insight makes this a daunting task, resulting in a significant amount of time and resources spent digging into feedback, customer journey information and channel performance.

Anything to find the root cause. A real waste of your time, because a review like ‘the agent was great, but the product broke quickly’ is actually worthless and gives a distorted picture.

Map the time spent on your NPS evaluation and compare it to other CX metrics and the VoC. You should see that you can better spend your time capturing specific CX metrics.

Disadvantage 4: The NPS is out of date

We have to admit that the NPS reflects your customers’ intentions, but not their actual behavior. That is why it is not wise to rely on one metric to measure performance and loyalty.

There is a risk that you will focus on a single number and that data will be manipulated to achieve desired goals.

However, if it is management that requires the NPS to be measured, then it is smart to do so in a way that meets the expectations of customer service managers, but also does not overstate the importance of the NPS in customer service.

Disadvantage 5: The NPS is based on a single question

NPS is based on a single question, which can often lead to inaccurate results. That’s because customers can’t accurately estimate how likely they are to recommend a company based on a single interaction.

Moreover, they may be reluctant to share their opinions if they have had a negative experience. This can lead to companies receiving incorrect results and not being able to improve their customer service accordingly.

How do companies get a high NPS?

There are a number of companies that have a high NPS and maintain that score by doing a number of things right:

• They are 100% focused on the customer experience. They focus on the little things and make sure there is high overall satisfaction. They understand that it’s not about one interaction, but the entire journey the customer takes.
• They have a good product. The product SO must be good so that customers will recommend the company. If the product is not good, existing customers will not be willing to promote it.
• They have happy employees. Employees who are happy and satisfied with their jobs are more likely to provide good customer service. They are more likely to care for the customer and want to see them succeed.
• These companies listen to feedback. . They are always looking for ways to improve and make their customers happy.
• They use good software. Contact center software, such as Steam-connect, helps you keep track of customer interactions and customer feedback. The software helps you improve your net promoter score by identifying areas where your customers are dissatisfied and helping you solve these problems. In addition, the software allows you to track your customers’ satisfaction with your products and services over time, so you can see how your NPS score changes.

What should you do with a low promoter score?

You’ve measured your NPS and the results are a disaster: your company is evidently not performing very well.

If you have a low NPS, there are a number of things you can do to improve it and get satisfied customers.

1. Understand why you have a low promoter score. A low NPS means you need to dive into the data and find out why your company is not being recommended. Once you know the cause, you can work on a solution.
2. Start focusing on the customer experience. Make sure you have a 360-degree customer view and your customer journey is right down to the last detail.
3. Look critically at your product. It must be so good that people recommend it.
4. Talk to your people. How do they experience it and can they help you increase your NPS?
5. Look critically at your processes. The customer satisfaction score is a tell-tale sign, something is going wrong somewhere. Can you optimize processes? Then do so.

Conclusion

The NPS is a useful tool that measures customer loyalty and the number of promoters. The ultimate question asked is “would you recommend us to a friend or colleague?” The net promoter score has a strong influence on your sales.

The net promoter score also gives you insight into the underlying reasons why customers are reluctant to recommend a company, and those reasons should be taken into account when trying to improve NPS.

Want to spar about your processes? Then request a no-obligation consultation. After more than 15 years, we know the customer contact world inside and out. Since we think it would be a shame to keep that knowledge to ourselves, we are happy to share it with you. Sign up for a no-obligation consultation and we’ll visit you to spar about your processes.