NPS – Measuring Client Satisfaction

NPS – Measuring Client Satisfaction

The Net Promoter Score (NPS)

is a technique that is widely used to measure your customers’ satisfaction with a product offered by you or your company. It’s a simple and practical calculation. As the name implies, the result is the percentage of people who promote your brand/product, or in other words, the percentage of people who would recommend it to other consumers.

How to use it?

An NPS survey always begins with a standard question:
“On a scale of 0 to 10, how likely are you to recommend [Company X or Product X] to a [friend, colleague or relative]?”
Based on the result, your customers can be classified as:
– Promoters (people who answered 9 or 10);
– Passives (people who answered 7 or 8);
– Detractors (people who answered below 7).
Using our customers’ scores, we can calculate the NPS using the formula:
NPS = (% promoters) – (% detractors)
Notice that the result can vary from -100% (all your customers may speak poorly about your product) to +100% (all of them would recommend your product).
Ask for feedback
The NPS alone might not always help us as much as we would like. But since the primary survey question can be answered very quickly, you can use the opportunity to ask your customers a second question, which should be based on the score they gave in the first question. When I apply NPS to products, my second question is usually:
To Promoters: “Thank you! Have you recommended us to anyone yet?”
To Passives: “Thank you! What could we do to earn a 10?”
To Detractors: “Your opinion is important to us. Could you tell us how we can improve?”
It’s crucial to provide an open text field for the feedback answer. A common error is to try and predict the answers, offering the client ready-made answers to choose from. By doing that, you’ll be leading them to a certain answer and you won’t get useful feedback.

Margin of error and tools

A common challenge is figuring out how many answers are necessary for the score to be reliable – I usually say that any answer is better than no answer. But, keep in mind that if you use the score, it’s important to know its margin of error. Tools and formulas to estimate your margin of error can be easily found on the internet.
Another way not to get bogged down with too many answers is to do the survey periodically, keeping it available for a limited amount of time. For example, you could install an NPS survey which is available on your website for one week, every two months. This would provide you with enough comparative metrics to gauge your level of service.

What makes a good NPS?

That depends on your industry, and on your competitors’ NPS. In this case, comparing is better than focusing on an absolute figure.
In some markets, an NPS above 20 is great. In others, an NPS below 60 will put you behind the competition. However, a positive NPS will at least indicate that you have a healthy product, unlike a negative NPS, which probably signals that soon nobody will be using your product – after all, who wants to buy something that most people wouldn’t recommend?

Want to know more?

If you want to dive deeper into this topic, see the article by Bain and Company – this was the company that developed this survey model. And there are many other resources on NPS available on the internet.
Did you enjoy this? Would you like us to write more about survey models? Please leave your suggestion in the comments section.

By | 2017-11-16T15:51:39+00:00 November 3rd, 2017|Marketing, Product Owner|0 Comments

About the Author:

Marcos Garrido is a Certified Enterprise Coach (CEC) – he is part of a select group of 34 people all over the world holding the two most important Scrum Alliance certifications. Marcos operates internationally and has vast experience in product management. Read more

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