NPS: Using Net Promoter Score to Learn about Your Small Business

What is Net Promoter Score (NPS)?

Net Promoter Score or NPS was developed by Fred Reichheld, a partner at Bain & Company in 2003 as a research project to create a survey question that correlated with customer behavior. Since then, NPS has been adopted by thousands of companies. The premise of NPS is simple. A survey is sent to customers asking them one question “On a scale of 1-10 with 10 being very likely and 1 being not likely, how likely would you be to refer Company XYZ to your friends?” It is typically accompanied with a follow-up question asking why the score was given.

NPS is used across a variety of industries – both B2C and B2B. It doesn’t matter if you are a SaaS company like SnapRetail or a women’s clothing boutique you can use an NPS survey to learn how your customers truly feel about your business, product, or service. It is widely accepted that a high NPS score predicts the future growth of a business.

How NPS is calculated?

An NPS score is calculated by taking the % of those who respond with a 9 or 10 and subtracting the % of those who respond with a 6 or less. Those that score a 7 or 8 do not factor into the score. Let’s say you receive 1000 survey responses, and 400 responds (40%) with a 9 or 10, 200 answers (20%) with a 7 or 8 and 100 replies (10%)  with 6 or less. Then, your NPS score would be 30. The score varies across industries. According to Promoter.io, any score above 0 is “good,” higher than 50 is excellent, and 70 or above is “world class.”[3]

How does NPS helps businesses?

However, the score is not the end game. Uncovering feedback from customers, learning which customers would be likely to refer you to others, and what pain points customers may be experiencing are the more significant outcomes from running an NPS survey. Finally, following up with those customers based on their score is very important, too.

Those who respond with a 9 or 10 are called Promoters because they are likely to promote you to others. We recommend to reach out to these customers not only to ask them to review you or promote you to others, but to find out what they like about your company, product, or service. The answer may surprise you.

Those who respond with a 7 or 8 are called Passives. Essentially, they are indifferent to your product, service, or company and are at-risk to leave or stop shopping with you if they find a lower price. We recommend to reach out to them to make sure they know about everything you offer and to help them experience what your Promoters say makes you special.

Finally, those that score you 6 or less are called Detractors. They are at the most-risk to leave your company or stop purchasing from you. Reach out to these customers to find out more about why they gave you the score they did and what you can do to make their experience better.

NPS at SnapRetail

Here at SnapRetail, we send out an NPS survey two to three times per year. From May 11, 2017, to June 21, 2017, we surveyed our customers using the NPS method. Our final score was 35.09. Segmenting just customers who have our responsive website feature our score was 54.48. (if you haven’t checked out this feature, you need to; our customers love it!) We use NPS to get a better understanding of what our customers like and don’t like about what we have to offer. We read all of the feedback and any feedback that we can take action on we do.

In the past, our customers told us that they wanted to see more email templates and more billing options like monthly billing. We now offer monthly billing options, and we are consistently adding many new templates every month. So, whether the feedback you gave us was positive, negative, or in between – thank you for just responding!

We are always overjoyed by the high praise we receive from our customers when we send out these surveys. In closing, I’d like to leave you with some of our favorites: