Why Net Promoter Score (NPS) is So Important for a Business to Measure

If you want your business to grow consistently, you need to start measuring and boosting your customers’ net promoter score (NPS). But what makes this metric so indispensable for your business analytics? And what steps can you take to boost it?

What Is NPS?

What is NPS, exactly? According to Delighted, “Net Promoter Score (or Net Promoter System) is a proven methodology for measuring customer loyalty through first-hand feedback. NPS is a popular customer experience metric because it is simple, effective, and correlated to revenue growth.”

In other words, NPS is a quantifiable way to estimate the loyalty of your customers. The higher your average NPS is, the more invested your customers are in your business. The more invested they are in your business, the more likely they’ll be to make purchases with your brand in the future, the less likely they’ll be to switch to a competitor, and the more likely they’ll be to actively recommend your brand to their friends and family members.

Why Is NPS So Important?

Why is NPS so important for businesses to measure?

The main selling point of NPS is that it helps you measure customer loyalty. But this affects many different areas of your business.

For example:

  • Customer retention. Customers who rate your brand highly will be much more likely to buy from you in the future, increasing your revenue and lowering customer churn.
  • Brand evangelism and new revenue. Customers who are enthusiastic about your brand will likely recommend it to people they know, bringing more people to your business and generating more revenue on your behalf. Over time, this can help your company grow significantly
  • Brand reputation. Net promoter score is also a great way to evaluate your brand reputation overall. Higher scores mean people think more highly of your brand, which is good for business in a multitude of ways.
  • Competitive dominance. Many great businesses fail simply because their competitors outdo them. Keeping an eye on your NPS is a convenient way to track how you’re performing compared to the competition.

Additionally, NPS can help you evaluate several different aspects of your business, such as:

  • New products. Are you introducing a new product? See what happens to your Net Promoter score after it hits store shelves.
  • Customer service. Is your customer service lacking in any way? If so, your NPS will likely reveal it.
  • Resilience to new competitors. If a new competitor emerges in your industry, and your NPS goes down, it’s a sign that you need to step up your game. Conversely, if your NPS remains high in the face of competition, you must be doing something right.

How to Measure NPS

We’ve established that NPS is important, so how do you actually measure it?

There are a few different methods here, but the easiest way is through the execution of periodic customer surveys. Generally speaking, short and simple surveys get much higher response rates and much more reliable data, so it’s in your best interest to keep your surveys as short as possible.

A common approach to NPS surveys is to ask two simple questions. The first question is, “how likely are you to recommend this brand to a friend?” Here, your customer will respond with an answer on a scale from 0 to 10. A response of 0 is not likely at all, while a response of 10 is very likely. The second question provides an opportunity for more open-ended feedback. Here, your customers will have a chance to write a few sentences about why they chose the number they did. It’s a great opportunity to learn what, specifically, a customer likes or doesn’t like about your brand.

You can deliver the survey in a number of different ways. Some of the most popular mediums include email and SMS text. No matter what method you choose, it’s important to submit these surveys regularly so you can see how customer attitudes change overtime. It’s especially important to do this if you’re introducing new products, changing your customer service strategy, or are changing the business in some other fundamental way.

Generally speaking, a score of 9 or 10 indicates that a customer truly loves your product or brand and that they’ll go out of their way to recommend your brand to other people. A score of 7 or 8 is still good, but a customer rating your brand this way likely has a few issues with your brand. They might mention it to a friend, but they won’t go out of their way to evangelize it. If you get a score of 6 or below, you have a detractor on your hands. Detractors may go out of their way to stop people from using your product or service.

Additional Tips for Measuring and Using NPS

Here are some additional tips for how to use NPS in a business effectively:

  • Get the right sample size. If your sample size is too small, you won’t have reliable data. If it’s too big, you’ll waste time and effort. Try to get it just right.
  • Pay close attention to comments. It’s easy to get fixated on numbers, but it’s just as important to pay attention to the comments your customers leave behind. What are people saying about your brand?
  • Don’t ignore outliers. Outliers are data points that deviate from the average. It’s tempting to discard them entirely, but they can teach you a lot about your brand.
  • Follow up with more detailed surveys. NPS is just one tool you have to gauge customer sentiment and come up with new ways to improve your business. Be sure to follow up your NPS surveys with additional, more detailed surveys.

With a solid and consistent way to measure NPS in your business, you’ll have a clean window into the sentiments of your customers. Measure NPS regularly and observe its changes as your business and your competitive landscape evolve; if executed correctly, it will help your business thrive for years to come.