It measures on a scale of 1 to 10 the likelihood that someone will recommend your company to someone else.
This allows you to quickly, easily and cost-effectively see how well your initiatives are received by your customers.
Net Promoter Score
The theory behind NPS is this:
Customer satisfaction and loyalty have a direct impact on sales .
How likely consumers are to recommend your brand to friends and colleagues is directly related to their satisfaction.
Why are recommendations important?
The NPS tells companies how well they are doing in two very important areas, customer acquisition and customer retention.
Referrals lead to sales: 64% of marketing managers consider word of mouth to be the most effective form of marketing .
Word of mouth is the most effective form of marketing
According to Nielsen analysts, 92% of consumers trust recommendations from friends and family more than any other form of advertising.
Net Promoter Score Word of Mouth
Image source: Nielsen
At the same time, customer loyalty can be measured through recommendations. This in turn is crucial for profitability, because it is much cheaper to get an existing customer to make a repeat purchase than to recruit a new customer.
Once you have your current NPS as a baseline, you can measure the impact of different variables on that score to figure out how to achieve higher NPS and higher sales.
Why is NPS so important?
The Net Promoter Score was invented by Fred Reichheld in 2003 and made popular by the Harvard Business Review article “ One Number You Need to Grow .” Reichheld was looking for a solution to existing problems with customer satisfaction surveys, which are often not very helpful.
They are often long and complicated, have low response rates, and often contain ambiguous wording that makes them difficult to interpret. They are also rarely seriously questioned or examined because most executives, board members, and investors give them little importance. This is because their results have little to do with profit and growth.
Proponents of NPS say it is closely linked to profit and growth .
Net Promoter Score and Growth
Image source: Net Promoter System
Others say that customer responses are not directly related to actual customer behavior . Their argument is that intentions are not actions - and are therefore useless as a metric.
No matter how you look at it, NPS can be a worthwhile measure. It gives you a baseline that lets you see at a glance whether people are becoming more or less positive about your brand over time, and it also lets you identify people who would advocate for your brand (or at least say they would).
NPS is one of the quickest and easiest ways to find out what your customers think about your brand, and if it really says something about how likely customers are to recommend you, that makes it even more important.
In 2003, it was realistic to hope that a customer would tell two friends about a brand. Today, realistic success looks like a customer raving about it to two million people on their blog, Twitter, Facebook, Snapchat, Instagram, WhatsApp, and various other channels.
Net Promoter Score Infographic Interaction in Social Media
With more opportunities than ever to voice their opinions – positive or negative – it’s malaysia telegram data more important than ever to make sure they have something positive to say.
How is NPS measured?
The NPS is determined with a simple question: “How likely would you be to recommend us?”
The first thing you should do is ask your current customers. A good time is immediately after a purchase or contact with customer service.
To do this you need an NPS questionnaire.
SurveyMonkey offers templates that can be helpful if you've never done surveys like this before.
template for measuring the Net Promoter Score
You can also automate the whole process using survey tools .
A scale of 1–10 is usually used.
At the same time, a 7-point scale (from 1-7) is becoming more common: some studies have found that people are less likely to randomly choose values on such a scale than on an 11-point scale. Researchers suggest that a smaller number of options is less overwhelming, and therefore fewer random answers are given. At the same time, 7-point scales are less common and may be unexpected for respondents, causing them to think before answering and thus give more accurate answers.