A net promoter score (NPS) is a measurement of what percentage of your customers are loyal to your brand compared to what percentage will likely advise other potential customers to take their business elsewhere.
An NPS is calculated with a 0–10 scale; customers are asked a question along the lines of: 'how likely are you to recommend company x to others?' Scores of nine and ten are considered positive—meaning these individuals will help your business grow—and scores of six and below are considered negative for your business (scores of 7–8 are ignored).
Calculating a net promoter score is as simple as taking the percentage of customers who gave a positive score—meaning nine or higher—and subtracting the percentage of negative scores (six or lower) from it. The reasoning behind this is that the higher a business' NPS, the more likely any given customer will be to recommend it to others. Ideally, this gives business owners an easy statistic to look at when estimating potential growth and determining if they need to make any changes to their customer service strategy.
History of the NPS
The net promoter score was created through the combined efforts of Fred Reichheld, a team from Bain and Company (a management counseling firm), and Satmetrix—which supplied the data used by Reichheld and the Bain team.
Comparing customer responses to a range of different questions to actual business expansion led Reichheld and the Bain team to the conclusion that the now widely-recognized recommendation question was the most accurate predictor of a company's growth based on customer feedback; from this realization, the net promoter score was born.
When an NPS Should be Used
An NPS can be useful when:
- Determining potential future growth
- Gauging customer satisfaction
- Developing new customer service initiatives
- Finding out which of your business' products or services have the highest rate of customer approval
- Gathering customer data for long periods of time in order to evaluate changes and trends
Pros and Cons
Although an NPS can be a useful tool for decision-making and strategy evaluation, it's important to remember that not every situation calls for the sort of information that's provided by this measurement. Like many tools, a net promoter score's usefulness depends entirely on the situation:
- Easy to collect data and calculate
- Tracking changes over time is simple
- Provides useful results that can help inform decisions relating to customer service
- A net promoter score becomes somewhat unreliable if an unusually large percentage of customers give a score of seven or eight (which are not taken into account during calculations)
- Since the information used to calculate the NPS is collected anonymously through internet surveys, the results may not be completely reliable
- Small businesses—who have proportionately limited customer bases—will have less data to support their NPS than larger, international corporations and will not benefit as much from using them because of this
How to measure NPS with chatbots?
NPS is a quick measure to estimate customer satisfaction, and chatbots are ideal for this purpose.
There is a multitude of options, such as:
- Ask for NPS after performing actions through a chatbot
- Open a proactive chat prompt asking for NPS during browsing of a website or after completion of a transaction
- Use Facebook Messenger chatbots to periodically ask for NPS score
- Incorporate voice-enabled chatbots in our facilities to ask for NPS from visitors, customers or employees