How to get Started with NPS - measure and improve customer loyalty

In this article, we delve into how NPS works and how NPS evaluations can help your company gain better insights into what you excel at and what you can improve for your customers. Studies show that companies across all industries see higher revenues when they improve their Net Promoter Score.
NPS is also an important tool for acquiring new customers. Today, many potential customers look at previous reviews and ratings from other customers. Therefore, it is crucial to gain important insights into what your existing customers actually think about your company.

Research shows that there is a strong correlation between a company's NPS and customer loyalty. The brands we, as consumers, are loyal to, we are also more likely to recommend to our surroundings.

Net Promoter Score (NPS) is a metric ranging from -100 to 100, designed to measure customer loyalty in a cost-effective and efficient way. Completing an NPS survey is quick, as it consists of only one question, resulting in a high participation rate from customers.

The customer satisfaction survey consists of a single question, often phrased as follows:

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

To improve NPS, it is important to understand why customers give the ratings they do. Therefore, it is common to follow up the NPS question with an open-ended field where customers are encouraged to justify their rating. If the question's heading is adjusted based on the rating given (e.g., "Tell us more about why you would not recommend [Organization]"), this can increase the number of collected open-ended responses.

By analyzing how detractors, passives, and promoters rate other questions, you can identify what in your offering has the highest correlation with your NPS. For example, you can learn how good or bad customer support affects NPS or how payment options impact customers' perception of the entire business.

To obtain an accurate NPS measurement, it is important to collect responses from a representative target group. Selectively choosing who receives the survey can skew the results.

Common mistakes include manual selection in the process or not distributing the survey through various channels (e.g., mobile, email, SMS). It is crucial to ensure that the NPS question is posed to the right people and that the response rate is carefully monitored.

An overall NPS of, for example, +30 can be difficult to act on. By breaking down NPS by time, geography, or individual level, more insights can emerge. A company may have an overall NPS of +15, but +10 in Sweden, +15 in Norway, and +20 in Finland. In Sweden, the result may vary between different Customer Success Managers, where one CSM has -10, another +4, and a third +30. Analyzing the differences between various Customer Success Managers can also help identify specific areas for improvement.

It is common to measure NPS at different intervals. For example, a company may have an average NPS of +20 during the first quarter (Q1), with sub-results of +15 in January, +20 in February, and +25 in March. This assumes that the number of responses is evenly distributed each month; otherwise, the total result is weighted based on the number of responses.

There are several occasions to measure NPS:

Each method has its pros and cons. Event-based surveys often have a high response rate because the interaction is fresh in memory. Recurring surveys help track long-term trends but can lead to survey fatigue among customers. Ad-hoc surveys are good for specific purposes but should not be used as the sole method for long-term NPS measurement.

By carefully choosing the timing and method for NPS measurements, companies can gain valuable insights to improve customer loyalty and the customer experience.

Respondents answer on a scale from 0 to 10, where 0 means "not at all likely" and 10 means "extremely likely."

Assessing what constitutes a good NPS score can be complex, especially when comparing different companies. While it would be ideal for all customer interactions to result in a 10, this is very rare. It is unrealistic to expect an NPS of 100.

If you have sent out an online survey with the NPS question, where the scale is 0-10, and received 100 responses from customers, can you take an average from the results? Not quite.

The NPS system calculates a percentage based on the collected responses and creates the following categories: detractors, passives, or promoters.

NPS = (percentage of promoters - percentage of detractors)

If you have received 100 responses, see the calculation example below:

The percentages for each group are 10%, 20%, and 70%, respectively. Subtract 10% (detractors) from 70% (promoters), and you get 60%. The Net Promoter Score is always expressed as an integer, not a percentage, so the NPS score is 60. (It is possible to have a negative NPS score, as it can range from -100 to +100.)

Calculating your NPS score can seem complicated, as shown in the example above. One of the most effective tools is HubSpot, which makes life easier for you if you want to start implementing NPS surveys.

With HubSpot, you can easily and efficiently send NPS surveys and gain deeper insights into what your customers really think.