Net Promoter score: A Key customer experience metric to measure customer loyalty

Since Customer experience is a key product/service differentiator and will decide the next market leader. Business/ organizations start focusing on delivering enhanced customer experience but to improve or enhance anything, the first step is to measure it.

Net Promoter score(NPS), Customer Satisfaction(CSAT) and Customer effort score(CES) are three key metrics to measure customer experience. In this post i will be covering NPS and will be covering other two metrics in my upcoming posts. So let's start !!

What is Net Promoter Score?

The Net Promoter Score is a metric used in customer experience programs, that measures the willingness of customers to recommend a company's products or services to others. It is used as a proxy for gauging the customer's overall satisfaction with a company's product or service and the customer's loyalty to the brand.

How to calculate NPS?

NPS score is measured with a single question survey and ranges from -100 to +100 with objective to get higher score.

How likely is it that you would recommend Product X/Service Y to a friend or colleague?”

Customer gives a rating between 0 (not at all likely) and 10 (extremely likely) and, depending on their response, fall into one of 3 categories to establish an NPS score:

• Promoters respond with a score of 9 or 10 and are typically loyal and enthusiastic customers.
• Passives respond with a score of 7 or 8. They are satisfied with your service but not happy enough to be considered promoters.
• Detractors respond with a score of 0 to 6. These are unhappy customers who are unlikely to buy from you again, and may even discourage others from buying from you

NPS = % of Promoters - % of Detractors

For example, if 30% of respondents are Detractors, 10% are Passives and 60% are Promoters, your NPS score would be 60-30 = 30

What is Good NPS?

There isn't a universal standard for NPS, hence it makes sense for businesses to first look at average NPS in their industry and compare their scores to other businesses in the industry. This gives an idea of how good is their customer experience as compared to their competitors and If their score is falling short, then analyze the top performers in their industry and adapt their customer service approach.

Below is Average NPS of some of the popular industries.

Department/Specialty Stores: 58

Tablet Computers: 47

Brokerage/Investments: 45

 Auto Insurance: 44

Home/Contents Insurance: 42

Grocery/Supermarkets: 39

Companies with best NPS in their industry

1.      Costco - 74

2.      USAA - 73

3.      Southwest Airlines - 71

4.      Ritz Carlton - 68

5.      Apple - 68

This is part 1 of article on NPS. In next article, i will cover "How business can use NPS" and "How to improve NPS score". Stay tuned !!