Net What Score?

Posted In Business & Trends Written by Jakob Lorré

Net What Score?



When it comes to buying a product or service, recommendations from friends and family are often worth their weight in gold. If only there existed a universal rating that would express this degree of recommendation…
 

Enter the Net Promoter Score! 


— For businesses, the NPS is considered “the one number you need to grow.” It reveals great insights in customer satisfaction because it doesn’t just provide your customers’ rating, but their reasons for that rating too.
— For customers, the NPS is a rating system you can trust. It’s impartial, universal and it harnesses the power of something we all hold very dear: our reputation. When rating a company highly, customers basically put their *sses on the line.


How does it work


To calculate an NPS score, customers answer the following question:

On a scale from 0 to 10, how likely would you recommend our company/product/service to a friend or colleague?

Depending on their answer, customers belong to one of three categories.

9 - 10: a Promoter.
They were enriched by the experience, they’ll hand out unsolicited referrals and they will definitely purchase again.
7 - 8: a Passive.
They got what they wanted without any issue, but they’re not especially happy either. They would be open to other offers.
0 - 6: a Detractor.
They didn’t have a good experience and will choose a different company, product or service in the future.

How are these ratings processed? It’s not about the average, after all, it’s called the Net Promoter Score. We’re looking for the amount of Promoters in the feedback panel. So we follow this formula:

  • % Promoters - % Detractors = NPS

That means an NPS score can range from -100 (where everybody is a Detractor) to +100 (where everybody is a Promoter). Any score that is positive (+0) is considered good, and an NPS of +50 is considered excellent.

Let’s say a company received ratings from 100 customers (to keep it simple):

65 Promoters
15 Passives
20 Detractors

  • 65% - 20% = 45% = NPS 45. Woa, this company is doing great!


Conclusion


These scores may seem somewhat counterintuitive. It feels a bit ‘distorted’ that ratings between 0 and 10 generate a score between -100 and +100. So keep in mind that a positive NPS, any positive NPS, is already a positive thing.

In addition, some say that cultural differences lead to lower scores in Europe, as an 8 out of 10 is already considered very good. But hey, let's just embrace the global dimension of the NPS score and all it represents: better insights for companies, better experiences for customers! 

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