Any business owner knows that treating customers well is a major factor in the success of a business. But in the wise words of Peter Drucker, “You can’t manage what you can’t measure.”
There are a number of ways to measure the satisfaction of your customers. One of the most effective methods is to calculate your net promoter score.
In this definitive guide, we cover:
- How to calculate net promoter score?
- What does your net promoter score mean?
- How to benchmark your NPS score?
How do you calculate net promoter score?
The net promoter score or (NPS) by Fred Reichheld is a simple yet effective way to gauge brand sentiment and customer loyalty. Calculating your company’s NPS gives you a powerful metric that your entire organization can leverage, from Product and Marketing to Operations to Customer Service. When used to its full potential, your net promoter score is a catalyst to help you improve user experience and make more informed, customer-centric business decisions. And all it takes is one simple formula.
How to calculate net promoter score
To calculate your net promoter score, it begins by asking your existing customers a single question: “How likely would you recommend our company to a friend or colleague?” Customers can answer by choosing a scale that ranges from 0 (very unlikely) to 10 (extremely unlikely). Based on their answers, customers are grouped into three groups or categories:
- 9-10 – promoters; your biggest fans and advocates
- 7-8 – passives; neutral customers
- 0-6 – detractors; vocal critics of your brand
Once you’ve made a tally of all the number of respondents who fall into each group or category, here’s how to calculate NPS score: subtract the % of detractors from the % of promoters.
How to calculate net promoter score in Excel
Let’s say you sent a standard NPS survey and a good number of responses. Now, how to calculate your net promoter score in Excel? Here are the steps you need to follow:
- Encode your NPS data in Excel.
- Group responses are based on three categories: promoters, passives, and detractors.
- Add all your promoters and determine the number of customers in this segment.
- Do the same as Step 3 for the detractors.
- Then, divide the total number of detractors from the total number of respondents to determine the %. Do the same for the promoters and then multiply the answers by 100.
- Subtract the % of detractors from the % of promoters. The answer is your NPS.
When you follow these steps on how to calculate net promoter score, the equation would look like this:
NPS= (Number of Promoters / Total Respondents – Number of Detractors / Total Respondents) x 100
What does your NPS score mean?
After you calculate your net promoter score, you will end up with a number from -100 to 100. Every industry is unique in what is deemed a good or bad NPS score, but the categories typically break down like this:
- Poor – 0 and below. Your brand clearly has more detractors than promoters. You struggle with poor public brand perception and high customer churn.
- Good – 1 to 40. You are meeting customer expectations.
- Great – 41 to 70. You tend to wow your customers consistently with exceptional customer service.
- World-class – 71 to 100. These brands have customers who exhibit cult-like devotion.
How to benchmark your NPS score?
Net promoter scores vary by industry, which is why benchmarking your NPS score is important. For instance, if you have a SaaS business, you shouldn’t compare your NPS score with the banking sector’s score. To get a brief idea of where your business stands, you must know your industry’s benchmark. A good go-to resource for your industry’s benchmark is the 2020 Net Promoter Benchmarks report by Satmetrix.
The NPS survey covered 66,000 respondents for 190 brands across 23 industry sectors.
Automatically Measure Your NPS with FanExam
Learning how to calculate net promoter score isn’t complicated but if you continue to delve deeper into the best practices in NPS, you’ll discover that measuring and analyzing customer feedback is a regular exercise. It’s a crucial program that requires continuous oversight to have a clearer picture of your company’s overall health.
That’s why having FanExam as your NPS system for your SaaS app or website is valuable. You can strategically capture your net promoter score at vital points along the customer journey to better understand opportunities and pain points. Ready to improve customer experience by putting your NPS to work? Try it for free today.