What is NPS?
NPS stands for Net Promoter Score, and is used by many companies to map out how well their products are doing with their current customers.
How to calculate NPS:
- Carry out a survey of your existing customers, asking them to rate your product out of 10.
- Split them up into 3 groups, depending on where they fall on the scale
- Detractors: Scoring 1-6, these customers either actively dislike or have some significant issues with your product and will probably tell others to avoid it.
- Passives: Scoring 7-8, these customers think your product is alright and continue to use it, but would easily switch to an alternative that better solves their problem.
- Promoters: The holy grail of customers. Scoring 9-10 these customers are loyal and would probably recommend it to others.
- Calculate your score by subtracting the percentage of detractors from the number of promoters.
- NPS is expressed as an absolute number between -100 and 100. (Eg 20% detractors and 25% promoters leaves you with an NPS of 5).
- An NPS above 0 is generally considered a ‘good’ NPS score.
With NPS what we’re trying to achieve is a number reflecting customer loyalty. We want to know how many of the people who use our product are happy with it.
What do we want from Promoters?
Promoters are long-term customers, but they’re much more than that.
You can rely on Promoters for word-of-mouth marketing. They’ll be the ones most likely to tell their friends and family about your product, and recommend it to them.
They’re also very useful for your marketing team, engaging with your content and getting involved in user-generated content strategies.
They can also be more easily incentivised by referrals schemes, and will be more willing to leave you with constructive feedback in surveys.
Help your promoters to help you, by making promotion easy. If you introduce a referral scheme, keep it simple. These people are your #1 fans, but that’s no reason to turn referral schemes into an obstacle course.
The ideal referral scheme has a clear action with a clear result. “When your friend signs up, you’ll get $10 credit.” “Shout us out on social media for a free 3-day trial of premium.”
How to Use NPS Like a *Smart* Product Manager
Now you’ve got your positive NPS score. Job done, everyone loves us, pat on the back, lets all head to the bar for happy hour.
Like all things in product, that NPS score is more than just a number. A smart Product Manager knows that it needs to be unpacked.
Look at more than just the % of Promoters
While it’s great to know that 30% of your customers are absolutely loyal and adore your product, it’s important not to have that as your only takeaway.
Getting your NPS score is not the end of your customer feedback journey. It’s one number that helps you understand how your customers feel about your product.
If your NPS score reveals that 50% of your customers are Detractors and will ultimately lead people away from your product, you need to understand why.
Look at more than just Product
A customer’s opinion of a product isn’t only formulated around the product itself.
Branding, customer service, and company values, also play big roles in influencing customers. NPS gives you a very broad overview.
There might be nothing wrong with the product itself, the issue could be with customer service, of over-saturation on social media channels. Someone can love your product but hate that they get far too many emails from you.
Customers can also become detractors for products they don’t fully understand, which means you need to revise your on-boarding process.
It might be something that you, as a Product Manager, have no control over. If your company publicly takes a particular political or stance, the customers who don’t agree with it could become detractors, affecting your NPS.
So what is NPS actually good for?
Your NPS score opens the door to more conversations with your customers about your product. Those who are willing to answer an NPS survey may be open to contacting you further on what could make them happier.
NPS also gives you your promoters, the people who will act as cheerleaders for your brand. They’ll help you build growth loops into your product, and will be incentivized by marketing and referral schemes.
Need more answers? Check out this great talk from our friends at Pendo: