×
Request a Demo

Request a Demo

Look No Further. Get Started Today

 
 

Verification

Calculating Net Promoter Score (NPS) – Doing it the right way

Various industries calculate the Net Promoter Score with a standard formula i.e. Number of Promoters — Number of Detractors) / (Number of Respondents) x 100. But what can be considered as an ideal net promoter score differs for all the sectors.  Here is a representation of average Net Promoter Score by sectors -

How different industries calculate NPS

An average Net Promoter Score may differ for various industries. What is acclaimed as a good Net Promoter Score can be considered as a bad Net Promoter Score for another industry. So, while dismissing your NPS as a good/bad score make sure you have compared it to other competitors within your industry.

nps-by-industry Copyright Satmetrix

There are a lot of industries using the Net Promoter Score currently and thus what can be considered as an “ideal” score wildly depends on the industry type and products or services provided by your company. For example, (refer to the image above) Net Promoter Score for Health Insurance companies range from -2-35, with an average of around 10 whereas Net Promoter Score for Hotels, on the other hand, range from -20 to 62 approx, with a rough average of 30-32.

Such diverse are the average Net Promoter Score for the different industry so the personal qualifying scores for good or bad NPS would have to be set by the different industries themselves based on their industry type and the ongoing industry trend.

So, while an NPS as close as 100 is considered best but you may only concentrate on making your NPS to be the highest in your industry. Also, one of the best way to judge your NPS will be that you compete with your previous score and try to improve it more than the last time. This continuous competition with your own self to improve your score will ensure that you’re on the right track in terms of providing outstanding services to your customers.

Classification: Promoters, Passives & Detractors

Understanding the scale of a Net Promoter Score is pretty straightforward once you understand the three main concepts it conveys.

img7

Detractors

Customers who give you scores between 0 to 6 are known as “detractors.” They are unhappy customers who can damage your brand and impede growth through negative online and word of mouth reviews. They were not entirely satisfied with their experience and would probably tarnish your brand’s reputation with negative word-of-mouth. They will criticize your brand and demean your brand’s reputation. It would be highly unlikely that they would even return as customers again.

Passives

Customers who give you a 7 or 8 score in the Net Promoter Survey out of 10 are known as “passives” and are satisfied but unenthusiastic customers who are likely to look at alternative accommodations. They may have had a moderate experience with your brand but they are ‘passively satisfied.’ They may bring referrals, but may quickly switch to a competitor if needed.

Promoters

Customers who give you a score of 9 or 10 out of 10 are known as “promoters” as they are loyal enthusiasts who will be repeat guests and will refer others, fuelling growth. They are your most loyal customers and would look forward to repeating business with you. They are far more likely than others to remain customers and to increase their purchases over time. Also, they account for more than 80 percent of referrals in most businesses.

The Net Promoter Score is then calculated by subtracting the percentage of detractors from the percentage of promoters. Theoretically, it can range from -100 to +100. Practically, it is most likely to hover around 15 for most businesses in a competitive space. An NPS above 40, in fact, is considered exceedingly rare and is regarded as the benchmark for top players of any industry. This feedback system is a critical application in most businesses, restaurants, and hotels.

Customer Segments

The Zonka dashboard will automatically calculate your NPS score from the collective scores that you receive from your customers. But is this score trustworthy? Can you lay your future follow-up procedure and strategies on them? Obviously not! It’s a no-brainer to segment customers based on their NPS ratings (Promoters, Passives, Detractors.) But the true results can only be uncovered from additional segmentation by metrics that are important to your business. For example, if you have formulated pricing plans for your product/services, segment your users based on those plans. You will surely notice discrepancies in the overall NPS score and sentiment between the other distinct customer types. This valuable insight will thus help you to strategize further.

However, different industries can set their own custom customer segments the bottom line is grouping the homogeneous customer segment together so that similar kind of follow up plans can be formulated for one customer segment.

Non-customers, Prospect, Freemium & Paying

Similarly, an on-premise business like a restaurant may segment their customers by asking a simple question in the survey.

In this case, a person that has selected the option “This is my first time” can be a non-customer for the restaurant and the person that has selected the option “Once in several months” can be a prospective customer whereas people who have selected “I’m a regular” and “Once in several weeks” can be considered as real customers of the restaurant. Now the customer segmentation is somewhat more filtered and NPS surveys can be sent separately to these groups and then follow up can be strategized accordingly.

A SaaS-based company can segment various people taking their surveys by capturing relevant customer information, such as the type of customer. For example –

Non-customer: A non-customer for a SaaS company can be a person who has enquired about their product and filled his contact details in the website contact form long time back but hasn’t taken action since then.

Prospective customer: The one who has recently registered for a free trial/demo with the company can be considered as a prospect for them.

Freemium customer: A freemium customer could be the one who is currently using the free version / free trial of the product.

Paying customer: A person who is paying for using the software.

Now you can create a custom report as per the customer type based on their NPS scores and then decide which particular segment or which section of a segment to focus on.

img8

Focus shift – Detractors Vs. Promoters Vs. Passives

As soon as you receive your NPS results the process of following up begins along with it. Different organizations use different strategies for following up but for the same aim of elevating customer satisfaction amongst all its customer base.

After you get the percentage of net promoters, detractors, and passives according to the customer segmentation, which customer segment to convert into the other segment is something that is up for debate.

There are some businesses who believe that it is easier to convert a Passive customer to a Promoter. Passives are on the fence and might be more easily swayed. While others believe that it is easier to convert a Detractor to a Promoter. They are more vocal in raising their dissatisfaction so it is easier to affect them and identify improvement. You get one more chance to impress them which you may not get in the case of a Passive customer who you are unlikely to hear from again. The customer can often be so surprised about the swift response and the action taken that they may respond positively and tell others.

While following up and converting a specific customer segment for ultimately turning into promoters depends on your business strategy largely there are some tips everyone can generally follow –

– Find the common denominators among your passives( rating 7 or 8) and begin to work towards resolving their pain points. Follow up with them and improve your own procedures/policies if the need arises, and try to turn these passives into promoters.

– As for your detractors, focus on your “high” detractors (e.g. rating 4-6) because they have more potential to be a part of the next best group i.e passives and work on turning them up to the passive group at least. Along with Zonka’s collaborative response inbox, which allows you to solve customer queries and follow up with the means of creating and completing tasks with assigned due dates, you can find out loopholes in your processes and then finally fill the gaps, elevate the level of your customer care, or whatever issues that obstruct a good customer experience.

– Promoters are your free source of advertising, so never forget them. Understand why they love your business and why they actually are your true fans and make sure they get a continuous good experience with you in future too.

Submit a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

add-icon