NPS (Net Promoter Score): What Is It and How to Track It

Companies use NPS (Net Promoter Score) to monitor customer retention and loyalty. Read this guide to learn everything about NPS and conduct it effectively! 

What is NPS: How to Measure and Use It 

Let’s look at what NPS is, what promoters, passives, and detractors are, and how to calculate the Net Promoter Score. 

What is NPS?

NPS is a customer loyalty index that helps companies identify customers’ opinions about the product and their willingness to recommend it to others. Your NPS level shows whether your customer retention strategy works well.

What Are Promoters, Passives, and Detractors? 

Promoters are customers who gave you the highest marks (9 and 10) in an NPS survey. The more promoters you have, the more confident you can be about customer loyalty in your company. 

Detractors (or critics) are customers who gave you 6 points or less. Mind that detractors are very likely to write a negative review about your company (if they haven’t done it yet). 

Passives are neutral customers who gave you 8 or 7. Mostly, passives are likely to leave your company if they find a more suitable competitor. 

What Is the Formula of NPS?

The Net Promoter Score is calculated with a simple formula:

How to Conduct an NPS Survey?

You can use different channels to conduct a survey: for example, survey customers via email, SMS, a phone call, or even at a personal meeting. Ask your customers one simple question: “On a scale from 0 to 10, how likely are you to recommend our product/company to others?”. 

The most important NPS rates are from 9 to 10 (promoters) and from 6 to 0 (detractors). If you use the simple formula we mentioned above, neutral customers are not taken into account. 

If you want to get more precise data, you’ll need to have a closer look at the neutrals: how likely they are to join promoters or detractors.

How Often Should I Conduct NPS Surveys? 

If your NPS doesn’t change over time or even gets lower, you must boost your retention strategy. 

Thus, every company should monitor the NPS in such a way that they can spot the dynamics in time. The frequency is unique for each business. 

How to Use an NPS Survey

The Net Promoter Score helps you understand your next strategy, no matter the results. 

If your NPS is rather high (>60%), your company can count on a decent market share in your niche. If the score is lower than 50%, you must reconsider your retention strategy.

Also, it’s important to take into account other metrics when you do an NPS analysis. If the revenue grows and the NPS is low, there’s a risk that your competitors will offer a similar product for a smaller price.

How to Grow NPS and Retain Customers 

If you want to grow the NPS, you should work with each customer group separately. 

Detractors are likely to have some issues with the product or post-sale services: identify these issues and help detractors solve them. 

The passives are the most difficult customers to work with: they can turn into detractors at any time. The most popular retention strategies for this segment are gifts, sales, updates, and personalization.

Last, but not least: say thanks to your promoters and give them personalized offers. Don’t forget that the promoters are the ones who build your reputation.

What Are the Benefits and Drawbacks of Net Promoter Score?

Somehow NPS has become a synonym for retention: today, it’s hard to find a SaaS company that doesn’t track its NPS. 

It’s time to talk about the pros and cons of NPS and ask ourselves: is NPS the best way to show the level of customer retention?

Advantages of NPS 

1. NPS helps you focus on the clients and their needs.
2. NPS helps track detractors and change their minds before they leave.
3. NPS motivates departments to identify and solve problems together. 
4. NPS helps you keep up with industry standards. 

Drawbacks of the NPS Approach 

1. The NPS survey is completed only by a small part of users.
2. Different situations and customer groups require different approaches. Are you sending the NPS survey to a b2b client, an industry leader, product users, or all of the above? This and other specific factors can hardly be taken into consideration in simple NPS research. 
3. Sometimes you come across data manipulation. Today, the Net Promoter Score is so popular that the respondents might manipulate it. 
4. The NPS data might be not relevant. The truth is that not all types of products can be recommended to friends or colleagues. 

How to Measure NPS Effectively & What Additional Factors to Consider

Despite all the drawbacks, NPS is still a useful metric. We just need to be more realistic about the info it gives: the NPS shows you the approximate level of loyalty, but it doesn’t provide you with all the necessary data. 

It is absolutely necessary to enhance your NPS research with other metrics that evaluate clients’ loyalty and their willingness to recommend you to other people.

5 Key Metrics to Add to NPS Research

1. Recommenders. In an NPS survey, promoters are not those who have recommended the product; they are those who are likely to recommend it. Why not find out which part of your customers have actually recommended your product or services? Also, you can replace the question “How likely are you to recommend us?” with the question “Have you recommended us to others in the past three months?”
2. Health of the customer base. It’s important to track your health score before the client leaves. You can create real-time dashboards to track the state of your customer base with the best practices of analytics and reporting. 
3. Customer satisfaction index. You can conduct a CSI survey to find out what your customers like about your product and what should be corrected.

4. Attachment to the product. Ask your clients how disappointed they would be if they had to stop using your product. Would they be “very disappointed”, “a little disappointed”, or “not disappointed at all”?
   If at least 40% of your customers would be “very disappointed” without your product, congratulations: you’re on the right track!

5. ROI (Return on Investments). Try to find the connection between your ROI and NPS: this can help you improve the product and find out whether your investments in surveys are rational. 

Final words 

NPS is an important metric that helps you spot the issues and check in with your customers. Take care of your detractors and passives, don’t forget about the promoters, and you’ll gain success!