The Net Promoter Score (NPS) is a widely used approach for measuring user satisfaction and customer loyalty. It was introduced by Fred Reichheld in a 2003 Harvard Business Review article titled “The One Number You Need to Grow.” Product Managers can leverage the Net Promoter Score as a simple and effective way to gauge how likely their customers are to recommend a product or service to others.
Let’s take a closer look at how it works and what’s involved in applying the popular NPS approach…
The NPS Question
The heart of the Net Promoter Score is a single question that is typically presented to customers:
“On a scale of 0 to 10, how likely are you to recommend [product/service/company] to a friend or colleague?”
Based on their responses, customers are categorized into three groups:
- Promoters (score 9-10): These are highly satisfied and loyal customers who are likely to recommend the product or service to others.
- Passives (score 7-8): These customers are somewhat satisfied, but may not actively promote the product or service.
- Detractors (score 0-6): These are dissatisfied customers who are unlikely to recommend the product or service, and may even share negative feedback.
Calculating the NPS
To calculate the Net Promoter Score, subtract the percentage of Detractors from the percentage of Promoters. The NPS score can range from -100 to 100.
NPS = % Promoters – % Detractors
Interpreting Net Promotor Score
- NPS above 0: Indicates more Promoters than Detractors and suggests overall positive customer sentiment.
- NPS between 0 and 30: Considered a good score and indicates a strong base of loyal customers.
- NPS between 30 and 70: Indicates a high level of customer satisfaction and loyalty, with a significant number of Promoters.
- NPS above 70: An outstanding score that signifies a large proportion of highly satisfied customers who actively promote the product or service.
Benefits of the Net Promotor Score for Product Managers
Simplicity:
The NPS approach is straightforward and easy to understand for both businesses and customers.
Actionable Insights:
NPS provides actionable insights, allowing Product Managers to focus on improving customer experiences and turning Detractors into Promoters.
Benchmarking:
The NPS can be used for benchmarking against competitors and industry standards.
Growth Indicator:
The ultimate goal of NPS is to drive growth by increasing customer loyalty and positive word-of-mouth referrals.
Use Cases of the Net Promoter Score for Product Managers
Customer Feedback:
The NPS helps Product Managers gather feedback from their customers in a concise manner, making it suitable for surveys and quick assessments.
Performance Measurement:
Product Managers often use NPS to track customer satisfaction over time and assess the effectiveness of improvements in their products or services.
Customer Service:
The NPS is often used by Product Managers as a metric for evaluating the performance of their customer service teams and product-related interactions.
Limitations of the Net Promoter Score
Oversimplification:
Some critics of the approach argue that reducing customer sentiment to a single number oversimplifies the complexities of customer experience.
Lack of Context:
The NPS alone does not provide specific reasons for customer feedback, requiring additional qualitative research for deeper insights.
Net Promoter Score Conclusion
Overall, the Net Promoter Score is a valuable approach for Product Managers to measure user satisfaction and customer loyalty. Its simplicity, actionable insights, and focus on driving growth make it a go-to choice for businesses and Product Managers seeking to understand and improve their customer relationships and product performance.
The Net Promoter Score can be collected in any number of ways. Including in-product feedback perhaps as a user completes a specific task, at the end of support calls or via other interactions, as a support or sales follow-up via email, phone, or other means, or as a dedicated survey that is distributed across the whole customer base or a select sample of customers. Just be mindful to ensure that whatever context scores are attained, the specific conditions don’t bias the results one way or the other.
Additionally, if possible, consider using the method in conjunction with other feedback mechanisms and qualitative research to gain a more comprehensive understanding of customer experiences. For example, an additional open-ended question could be added to the process to ask why the customer provided the rating they did. Alternatively, additional follow-up surveys could be commissioned to attain more nuanced data to inform specific areas for improvement.
