What is NPS?
Net Promoter Score is one of the most widely used metrics for understanding customer satisfaction and loyalty.
How do you measure it?
Customers are given an NPS survey with one simple question asking “How likely are you to recommend [company] to a friend or colleague?”.
Then, they are asked to provide a rating between 0-10 to score their answer, with 10 meaning they are most likely to recommend the product and 0 being the least likely to recommend it.
Customer responses are then grouped into one of the following:
Scoring system:
0-6 – Detractors
Customers that are unhappy with your product and are at a high risk of churning.
7-8 – Passives
Customers that are generally happy with your product, but feel it’s missing a few elements to make it perfect.
9-10 – Promoters
Customers that love your product and would happily tell others to join.
The most important part of calculating your NPS is to understand that you don’t just average the score amongst the total user responses. Instead, you should subtract the percentage of detractors from the percentage of promoters to get an NPS score between -100 and 100.
Why is it important to measure?
Not only is NPS one of the easiest to compare benchmarks amongst industry peers, but it’s a good overall indication of how your customers rate your company and your product.
How should you use this KPI?
As with all the metrics, you can use it to keep your finger on the pulse of how customers feel about the direction of where your product is heading, i.e. are customers becoming more or less impressed over time?
But more so than others metrics, NPS comparisons can be made to rank your overall performance too. According to Delighted, the average NPS score amongst software companies is 41, though there is a wide variation with companies such as Adobe declaring their NPS at 60.
According to Ramin Shokrizadeh, a Senior Product Manager at Zendesk, NPS is also useful to analyse when segmented into different cohorts. “For web based products, I primarily focus on net promoter score (NPS) and its trend over time, broken down by customer segment and persona type”.
Check out other metrics that a product manager should track: