What is Net Promoter Score & Why is it Important?

Do you have a specific number that helps you gauge how satisfied your customers are?

When it comes to customer satisfaction, Net Promoter Score (NPS) is an invaluable metric.

By understanding and utilizing NPS, SaaS companies and SDRs can better understand how successful their systems are—and what they can do to improve customer loyalty.

In this blog post, we'll explore the importance of NPS and discuss why it should be an integral part of every startup's strategy.

Let's dive in!

Net Promoter Score (NPS) is a sales KPI used to measure customer loyalty, satisfaction, and enthusiasm with a company that's calculated by asking customers one question: "On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?"

Aggregate NPS scores help businesses improve upon service, customer support, delivery, etc., for increased customer loyalty.

NPS differs from other related benchmarks, such as the customer satisfaction score, by indicating a customer's general idea about a brand instead of their opinion on particular interactions or purchases. Because of this, it crops up frequently in discussions about customer experience.

Additionally, the net promoter score is a standard benchmark that businesses employ all across the world. This makes it a valuable approach for companies to evaluate their performance relative to their rivals.

Let's imagine you did an online survey with a 0–10 scale and an NPS question, and you got 150 replies from users.

To get an idea of how to interpret the replies from your survey, you can assign each replay to one of the following categories:

0–6 range (Detractors)

7–8 range (Passives)

9–10 range (Promoters)

The NPS system assigns you a percentage based on the group that respondents fit into—from Detractors to Promoters.

Therefore, use the following formula to calculate the percentage:

(Number of Promoters — Number of Detractors) / (Number of Respondents) x 100

Let's say from 150 users, 98 would promote (Promoters) your business. 36 users would not promote (Detractors), and 16 were neutral (Passive).

With the formula, the calculation is:

98 - 36 / 150 x 100 = 41

Your NPS would be 41.

If you already have the percentage of Promoters, Detractors, and Passives from your survey, you can simply ignore the 100 at the end of the formula.

The Net Promoter Score is always expressed as a number from -100 to 100; the score is negative when a company has more detractors than promoters, and positive in the opposite situation.

Any score above 0 in the range of -100 to +100 is considered "good" because it shows that a company has more supporters than opponents.

Top-tier businesses typically have an NPS of 70 or higher, but if you believe this is exclusively the purview of large, international businesses, think again: in 2018, Netflix had an NPS of 64, PayPal had a score of 63, Amazon had a score of 54, Google had a score of 53, and Apple had a score of 49.

A company has more detractors than supporters if its score is less than zero.

While an NPS score of -6 may seem poor in isolation, evaluating it without comparable ratings from influential industry players is challenging.

If the industry average were -11, the score would suddenly not look as bad. This is where industry NPS standards like the ones described above are helpful.

However, even with a low bar, a low NPS indicates that a company has a lot of work to do to turn things around, whittle down the number of dissatisfied clients, and increase the number of advocates.

The NPS allows you to see how satisfied your consumers are with your service, which is one of its key advantages.

The NPS allows you to measure this efficiently since we want as many customers as possible to be satisfied. You can take action to improve satisfaction if you perceive that it is not where you want it to be.

Customer advocates—those who spread the word about you to friends and coworkers—come with customer loyalty. In today's age of high-spend digital marketing, word-of-mouth is such a potent marketing weapon that it often goes unnoticed. Fortunately, your NPS will provide you with clear guidance on how to boost customer advocates.

The NPS system goes beyond simply measuring customer happiness by figuring out how many consumers are brand loyal. The most significant way to determine genuine customer contentment is to look at your NPS score. If customers aren't returning, satisfaction is meaningless.

Use NPS to measure your initial score and then reevaluate it later to determine whether your initiatives yield results. This enables you to assess whether your efforts boost loyalty; otherwise, you may adjust your strategy to advance.

It's vital to pay attention to how well your company generates advocates, but it's even more crucial to pay attention to how to lower customer churn. Promoters are obviously much less likely to leave a company.

Still, by understanding your NPS, you can invest more in giving customers a fantastic experience, which motivates passives and detractors to switch to the positive.

Overall, we aim for sustained business growth, and the actionable information that NPS offers is precisely what positions us to do so. Because promoters keep us going, we want as many customers as possible to be in the black.

Here's why:

- Promoters spend more money (and are less cost-conscious)
- They are more apt to experiment with novel product offerings.
- They persuade others to purchase from you.
- They have less turnover.
- Promoters have a better lifetime value in the end.

Increasing the proportion of promoters in your company opens up doors for tremendous growth potential, which is why NPS is so advantageous.

This group contains dissatisfied clients who will unlikely do business with you again. Detractors may make customers less likely to support your company. Thus, it's crucial to pay special attention to this group.

You can provide this group of buyers insights that will enable you to comprehend why their buying experience was unpleasant, turning this knowledge into practical information you can employ to enhance your company.

You can compute another NPS 3-6 months after making the necessary adjustments to address those pain areas to see if your modifications were successful.

This group of clients is made up of those who had no problems with their customer service, but who weren't quite impressed enough to recommend the business.

Passives are "take it or leave it" customers who may repurchase your product or service, but if a competitor offers a lower price or a more enticing extra feature, they'll swiftly switch over. Because of this, Passives can quickly transform into a Detractor by default.

The good news is, though, that they can also quickly transform into a Promoter.

This category indicates that you are succeeding since a significant portion of your promoters are referring customers to your establishment.

Making your customers' experiences as positive as possible will help you attract more Promoters because they are the most cost-effective form of advertising. If most of your clients are Promoters, work must be done.

Thanks to this group of customers, you can learn what else you can do to enhance your satisfied consumers' shopping experiences. Promoters can avoid becoming Passives by becoming familiar with the NPS calculation.

Measuring customer satisfaction is a critical component of any successful SaaS company. Net Promoter Score allows you to measure just how satisfied your customers are at a level that no other metric can match.

Using NPS, SDRs are empowered to help foster greater customer loyalty and improve the effectiveness of their systems. With all these benefits, why wait another day?

Get started with SalesPipe today and give your SDR team the tools they need to succeed!

Together, your team can cultivate a loyal customer base who will keep returning for more! Get in touch with us today :)