Net Promoter Score – How it works

Net Promoter Score – How it works

The Net Promoter Score uses a differentiated score to show how the proportion of customers who would recommend a brand, a company, a product or a service to others should be evaluated in relation to customers who would not make such a recommendation or who are neutral about it.

The Net Promoter Score thus provides relatively clear information on how customers tend to behave in recommendation marketing. The Net Promoter Score can be used to draw conclusions about customers’ commitment to a product. This makes it possible to focus customer experience management more specifically on improving customer satisfaction and to take appropriate measures.

We see the Net Promoter Score (NPS) as a method for measuring customer satisfaction and loyalty to a company, a brand, etc. The Net Promoter Score  is a method for measuring customer satisfaction and customer loyalty to a company, a brand, etc. The Net Promoter Score (NPS) is a method for measuring customer satisfaction and customer loyalty to a company, brand, etc. The basis of this measurement is the fact whether customers make or would make a recommendation.

The central question is: How likely is it that a customer will recommend a company (a brand, a product, a service, etc.) to a friend or colleague?

Our methodology for determining the Net Promoter Score

The Net Promoter Score is calculated on the basis of surveys that are clearly focused on the central question. Such surveys must have a standardized structure in order to achieve a comparable result. It is important that a high degree of attention is paid to the survey itself and that the individual questions are formulated clearly and in limited numbers. This is the only way to prevent the fundamental willingness of customers to take part in such surveys.

In addition to the central question of willingness to recommend the survey to others, the question of “why” is an important component of the customer satisfaction survey. So it is always a question of why a recommendation is made or why not. From this, conclusions can be drawn about the reasons for the customer’s decision and measures can be defined to influence the results of further surveys.

Advantages and disadvantages of the methodology

The advantages of the survey methodology

– User-friendly way to measure customer satisfaction

– Easy to manage

– Provides immediate information on the probability of recommendation

– Is a recognized method, which allows comparisons with competitors but also other industries

The disadvantages

– Different answers (based on gender, origin)

– Various methods for evaluating the survey results lead to a dilution of the informative value

– Link between company growth and the NPS is not proven for all industries

If one weighs the advantages of the method against the disadvantages, the perception remains that the Net Promoter Score offers a relatively simple method for measuring customer satisfaction and recommendation rate, but cannot be viewed absolutely and statically.

How we calculate the Net Promoter Score

Decisive for the evaluation of the Net Promoter Score is whether a transactional or a relational measurement is performed. The transactional measurement is an impulsive evaluation, in which a short-term impression of the customer usually determines the evaluation.

The situation is different with relational measurement. Here the customer has already developed a certain attachment to the company or the product (service etc.). Accordingly a long-term impression of the customer dominates in the evaluation, which leads in the consequence to a relatively consolidated evaluation.

A comparable Net Promoter Score can only be determined from the answers of the customers if, for example, the answer possibilities are divided on a scale of 0 to 10. The scales must again be subdivided into three sections.

Section 1 – Ratings from 0 to 6

We call these customers critics. They give a negative to average judgement on the respective question. This leads to the conclusion that these customers would probably not make a recommendation.

Section 2 – Rating from 7 to 8

The passive customers give points between 7 and 8. Here, too, it is obvious that a recommendation will probably not be made, but that no fundamental rejection is to be expected either.

Section 3 – Rating from 9 to 10

These are the actual promoters. These customers have a very high level of willingness to recommend, which in the most likely case will lead to real recommendations.

When calculating the Net Promoter Score, we deduct the percentage of critics from the percentage of promoters.

Example: If 45 promoters and 40 critics are determined in a survey of 100 customers, this results in an NPS of 45 – 40 = NPS 5.

The evaluation

The evaluation of the determined and calculated Net Promoter Score only makes sense if comparable calculations from other companies are available. An NPS of, for example, 5 without a comparison factor makes no sense for itself.

Therefore, it is important to have a benchmark factor for the evaluation of the NPS, which results from the different NPS of several companies in a sector. In addition, it may be useful to repeat the surveys within a specified period of time in order to identify significant changes in the NPS. Such changes can provide valuable insight into the effectiveness of the measures taken. However, it should also be noted here that a positive change in the NPS of an individual company has little significance.

Without benchmarking with competitors, the Net Promoter Score does not provide a representative result on a company’s recommendation rate in comparison with the market participants.

Further development of the Net Promoter Score

The Net Promoter Score can not only be used to measure customer satisfaction and referral rates. Other areas are also conceivable and are already being implemented.

Examples for other application areas of the NPS are

– employee satisfaction

– Reputation in social networks

– Mentions of a brand in social networks (Social Influence Marketing Score)

and similar areas and questions.

The specialists of bewertungsmarketing.ch are real experts in the survey, calculation and evaluation of the Net Promoter Score and always combine the evaluation of the NPS with the benchmarking of comparable companies. The integration of the NPS into customer experience management and into the processes of mystery shopping and benchmarking is one of the specialties of the experienced experts at Digital Perspectives GmbH and bewertungsmarketing.ch.

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