Net Promoter Score (NPS) - how to measure customer loyalty?

Loyal customer... Acquiring them is difficult, but crucial for the development of any business. Who is a loyal customer? It is a person who regularly returns to your company because they are satisfied with your offer and service, so they don't need to look for a product or service from the competition. Furthermore, a loyal customer willingly recommends your offer to their family and friends. How to measure customer loyalty? Simply conduct an NPS survey, which will allow you to draw conclusions and take appropriate steps to increase customer satisfaction and loyalty.

What is Net Promoter Score?

Simply put, NPS is a tool for assessing customer loyalty towards a company, brand, product, or service. NPS is based on a fundamental question: "How likely are you to recommend the service/product/brand/company to your friends/family?".

The respondent indicates their answer using an 11-point scale (0-10). Based on the responses, you will obtain data about three types of customers:

• brand critics,
• neutral customers,
• brand promoters.

Additionally, in a follow-up question, you can ask the customer about the reason for choosing a specific value on the scale. It is worth noting that NPS surveys achieve better completion rates than extensive questionnaires.

How to create a Net Promoter Score survey?

A properly constructed NPS survey consists of one question about the likelihood of recommending and a follow-up question about the reason for choosing a specific value on the scale. The range should be appropriately marked: "0" indicates no willingness to recommend, while "10" signifies complete loyalty and customer satisfaction.

In the invitation to complete the NPS survey, it is important to clearly state why you are conducting the survey. Emphasize how important customer satisfaction is to you and that every response contributes to improving your offer. You can also mention that the survey consists of two short questions, so it will only take 2 minutes to complete.

Why should you use NPS?

With NPS, you can find out if customers would be willing to recommend your company or products. If you also ask them for the reason behind their rating, you will receive valuable insights for the development of your business. NPS surveys will help you understand your customers, their needs, and pain points, making it easier to identify the challenges ahead. Analyzing respondents' answers will allow you to increase customer satisfaction, and consequently, positively impact future results.

How to interpret NPS?

Calculating the Net Promoter Score and interpreting the results is a crucial stage of the entire survey. As mentioned before, respondents' answers are divided into three groups: critics, neutrals, and brand promoters. Critics are individuals who marked 0-6 on the scale. They are dissatisfied customers who may share negative opinions about your business. Neutral customers choose 7 or 8 on the numeric scale. They can be considered relatively satisfied, but they are not inclined to recommend your offer and may choose the competition next time. They remain indifferent but are price-sensitive. On the other hand, brand promoters are customers who select 9-10 on the scale. They are not only satisfied but also willing to recommend your company or offer to others.

To calculate the Net Promoter Score, you need to exclude the neutral customers and then perform the following calculation:

NPS = (percentage of promoters) - (percentage of critics)

The NPS score can range from -100 to +100. The calculation shows that steps should be taken to eliminate critics and support promoters. Neutral customers are excluded from the calculation because proper actions taken by the business will move them into the promoter group. A positive score indicates good company performance. Scores above 50 indicate excellent results, and scores above 70 indicate high service quality and high customer satisfaction, which translates into company revenue.