What is NPS and how it works
NPS is often held up as the gold standard customer experience metric. First developed in 2003 by Bain and Company, it’s now used by millions of businesses to measure and track how they’re perceived by their customers. The system is based on a single question that asks customers to rate, on a scale of 0-10, how likely they are to recommend a company to a friend or colleague. The results are then grouped into three categories: detractors (customers who give a score of 0-6), passives (customers who give a score of 7-8), and promoters (customers who give a score of 9-10).
When to use NPS and what it measures
NPS is suitable when you want to measure the likelihood of customers returning, or when you want to know how loyal your customers are to your brand. It is based on a single question, measured typically with the standard 11-scale NPS survey, with results shown on a scale from -100 to +100. It is a good measure to see whether your customers would use your company’s services again.
Benefits as a management tool
NPS provides understanding of long-term loyalty and is a good tool for management as it can be correlated with increased business growth. By tracking the scores over time, companies can see whether their customer satisfaction is improving or declining. This information can be used to identify areas where improvements are needed, and to make decisions about how to improve the customer experience.
Limitations and how to overcome them
The NPS system is easy to use and intuitive, but it tends to not be specific enough. Companies need to supplement it with other metrics or surveys to get a more complete picture of customer satisfaction. Additionally, some customers may not be comfortable recommending a company to others, even if they are satisfied with the service they received. To overcome these limitations, it’s important to use NPS in conjunction with other tools and to take a holistic approach to customer satisfaction measurement.
How HappyOrNot can help with NPS
HappyOrNot provides a calculation to convert the Happy Index to an NPS. This enables companies to use real-time customer feedback data to measure their NPS scores and track them over time. Learn more about HappyOrNot Analytics.