Blog Posts by the Howaziteam
The NPS Index: Your CX Superstar
The VIP celebrity superstar of smart customer experience is undoubtedly the Net Promoter Score (NPS) index. Designed to measure customer loyalty, it is based on one single question: “How likely are you to recommend our business to your friends?” At Howazit, we know this one question is so crucial that we encourage our clients to incorporate the NPS in their satisfaction survey.
So, How Do You Measure NPS?
NPS answers sit on a scale of 0-10, dividing customers into three categories:
0-6 Detractors – Those who will not recommend the business
7-8 Passives – People who are satisfied but will not put effort into recommending it
9-10 Promoters – Those who are satisfied and will recommend the business
The NPS score is calculated as the percentage of Promoters minus the percentage of Detractors, ranging from 100 to -100. It is an easy mathematical formula that allows businesses to understand the level of customer loyalty and identify trends. A score in the range of 50 is considered excellent. The closer it is to 100, the greater the promise for business growth.
The premise of the index is that when a customer is asked to recommend a business to a friend, it implies a certain amount of risk. Therefore, their willingness to recommend it goes beyond just satisfaction, but even goes so far as to demonstrate a degree of loyalty and trust.
Here are our top 5 reasons why we recommend customers incorporate an NPS question:
- Measuring satisfaction as a business research tool – Measurement is just the first step in identifying the strengths and weaknesses of a business in customer experience. Only through data analysis of those measurements can a business identify key points for retention and improve accordingly.
- Measuring satisfaction as a business management tool – Measurement allows managers to know what is really happening in the business and what the true strengths and weaknesses are so they can manage accordingly.
- Laying the groundwork for a review – Just asking the question, ‘Would you recommend us?’ plants a seed in the customer’s mind, prompting them to think about giving a review. When they realize, “Hell yeah, I’d recommend them,” the next logical step is to actually write that recommendation. At Howazit we also directly channel customers to actual review sites like Google and YELP, or to WhatsApp members.
- Calculating and understanding through an easy numerical index – Again, the score is calculated by just subtracting the percentage of Detractors from the percentage of Promoters. Scores range from 100 to -100, with the 50 range being excellent. Can understanding the reality on the ground get any simpler than that?
- Measuring against the global comparative index – As of 2020, according to Wikipedia, two-thirds of Fortune 1000 companies use the NPS index. This commonality means a business can evaluate itself compared to objective benchmarks in its field anywhere around the world and truly understand its customer loyalty relative to competitors.