What’s an NPS? You’ve most probably already come across the term a couple of times before, but what do the three letters stand for anyway? And what is the meaning behind them? How do you calculate an NPS? Keep reading to find out the answers to all these questions and learn how you can improve your customer service with a good NPS score!
In this article we’ll cover the following topics:
NPS stands for Net Promoter Score.
It’s a method to measure the extent to which your customers recommend your company based on the (customer) service your online business provides.
The higher your score, the more a customer is inclined to recommend your company to a friend or colleague. This score only slightly differs from the star-ratings system that you are probably accustomed to. In the NPS system, the customer gives a score between 0 and 10. However, your final NPS score will range from -100 to 100.
Why are Customer Reviews so Important for Your Online Shop?
In essence, NPS is used by any companies to evaluate their own business. Lower scores will often lead many businesses to restructure their processes and policies.
As was just mentioned, an NPS score ranges from -100 to 100.
It’s calculated on the basis of so-called promoters, passives and detractors.
Promoters are all customers who have given you a score of a 9 or a 10.
Passives are customers who have rated your service with a 7 or an 8.
Detractors are the customers that gave your shop a rating of 6 or lower.
The calculation to figure out your Net Promoter Score is less complicated than it first seems. You just subtract the percentage of detractors from the percentage of promoters:
Promoters % - Detractors % = NPS
Let’s look at an example:
Let’s assume you've got 10 people filling out your survey. Out of these people, 6 give you a 9 or a 10 ranking, 3 will give you a 7 or an 8, and 1 person will rate your shop with a grade lower than a 7.
Thus, you’ve got:
The 6 promoters represent 60% of your customers, whereas the one detractor makes up 10% of all ratings.
Therefore, your Net Promoter Score is 50. The corresponding calculation is:
60 - 10 = 50
You can send the assessment form to your customers at any point of them using your service.
You can do so, for example, soon after your customer received their item. Also, there is the opportunity to do it after a customer gets in touch with you or your customer service, so that they can evaluate your customer service right afterwards.
To summarise, an NPS can be used in two different ways:
One way would be for clients to assess your service after receiving something from you (i.e. after receiving the item or service).
Another method would be to measure the level of helpfulness of your customer care after something has gone wrong.
Remember, making mistakes is not a crime. What matters more to your customers is how you solve things after something has gone wrong!
Find out the best way to handle negative Online Reviews!
If you’re sending the survey after the client has made contact with you, it’s essential to decide at which exact point you send it.
For example, if you send the survey right after the contact, it’s possible that the client still hasn’t received a solution to their problem (e.g. because they’re still waiting to receive a replacement product).
Then the customer is more likely to evaluate your business with a lower grade than if the problem had already been solved.
The detractors are an important group of clients. They’re the ones that were the least satisfied with your service, which is why you should keep an eye on them.
Remember: With an NPS you’re basically asking a customer: "To what extent would you recommend my company’s service to a friend?"
So, in order for your Net Promoter Score to be accurate, you’ll need to gather many responses to that question. Having a low response rate can have a big impact on your score, especially if some of the responses are “I never recommend companies.”
Passives have a surprisingly large influence on your score and sometimes this is the group of clients you can learn from the most.
Why did someone give you a 7 or an 8 instead of a 9 or a 10?
Passives can teach you how you can improve your service down to the smallest detail by figuring out the difference between an okay experience and a great one.
Promoters are already super satisfied with the service your company provides. Therefore, these are the customers that show you what you already do well.
Take a look at these reviews and make sure to keep on doing what they appreciated about your company’s performance.
The things they mentioned in their evaluation were things that they thought to be very important, so in turn, they should automatically matter to you, too!
You probably want your NPS score to be as high as possible, but sometimes people want that no matter what it costs.
You need to pay special attention to the quality of your service, especially if you’ve outsourced your customer service to someone else (e.g. an agency). The reason is that many such customer service companies have a priority to keep a high NPS. The NPS is often a key performance indicator (KPI) for their business and a basis for continuing to keep a client on board when it's time to renew a contract.
As the employees at such companies also have a focus on keeping a high NPS, they will often do whatever it takes to keep a customer happy. Oftentimes, that means making false promises to customers or giving away free items or store credit unnecessarily.
This is like putting a band-aid on a bullet wound. It will give you a false sense of where your company stands in the eyes of your audience and eventually, this will cost your business plenty of money (and your reputation!).
As a member of Trusted Shops shop reviews system, you can also send NPS-surveys to your customers to get a better understanding of how you are performing.
This article was originally published on our Dutch blog: Net Promoter Score (NPS): een snelcursus