What is NPS? Differences from CS/Introduction of calculation methods and utilization methods!

NPS is an important numerical value to know customer orientation. However, there may be some people who do not understand or do not know what NPS means and how it is used.

Therefore, this time, we will explain the outline of NPS, calculation/survey methods, effective NPS utilization methods, and introduce tools that can measure NPS.

What is NPS?

NPS stands for Net Promoter Score.

It is an indicator for knowing the customer’s intention to continue using the service, and is also translated as “customer recommendation rate” or “net recommender ratio”.

The figure below is an image of NPS.

In this way, the question “How likely are you to spread this service/product to your friends/acquaintances/colleagues?” increase.

CS: Difference from Customer Satisfaction

NPS is often confused with CS: Customer Satisfaction, so we will explain the difference between the two.

CS: Customer satisfaction is the same as NPS in that it evaluates how satisfied customers are with products and services, but CS: Customer satisfaction is the evaluation of products and services at the “current time” .

Even if a customer is evaluated as “satisfactory” at the time of evaluation, we do not know whether they will necessarily recommend the product or service to their friends and acquaintances.

Therefore, the major difference between CS and NPS is whether or not they measure whether they want to recommend a product or service to others.

NPS calculation method/survey method

First, create a question, “How likely are you to recommend this company (or this product/service/brand) to a friend or colleague?”

Customers are then asked to rate their product or service recommendation on a scale of 1 to 10.

After collecting the answers, we classify the customers into “three groups” based on the points (recommendation) based on the answers.

Respondents with a score of 0-6 are classified as “detractors,” those with a score of 7-8 as “passives,” and those with a score of 9-10 as “promoters.
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• “Detractors” are customers who are dissatisfied with your product or service, and if left unchecked, can spread bad publicity.
• “Passives” are customers who are satisfied with the product or service but are not enthusiastic, and are more likely to migrate to competitors.
• A “promoter” is an enthusiastic customer about a product or service. In addition to being repeat purchasers, they may also play the role of “recommender” to recommend the service to others.

Once you have categorized your customers, calculate the NPS. NPS can be calculated as below.
NPS = [Percentage of Promoters (%)] – [Percentage of Detractors (%)]

For example, if you survey 100 people and have 40 promoters and 10 detractors, NPS = 40%-10%, which is 30%.

What is an effective NPS implementation/utilization method?

By implementing and analyzing NPS before and after each measure, such as product function improvement and support expansion, you can verify whether the improvement or support expansion had a quantitative effect.

Also, since NPS is a universal number, you can compare it with your competitors.
However, NPS is a numerical value that indicates the degree of recommendation, and it is not necessarily related to sales, so caution is required.

In addition, GAFA and other companies that emphasize customer orientation use it as a [management indicator], so it can also be used as a numerical target for CS departments.
By setting numerical targets, you can expect to improve employee motivation.

How to improve NPS?

NPS is not just about measuring numbers, but improving numbers is also important. Here are some tips for improving your NPS.

Set up a free comment field

Ask in the free comments why you chose that number out of 10.
In particular, if you explore the reasons for the detractors’ numerical choices, you can come up with a concrete improvement plan.

Numerical analysis/comparison → devising and implementing improvement measures

Once you have your NPS and analyzed each tier, look up your numbers against your competitors and compare. Then devise and implement improvements to reduce detractors and increase promoters.

Average numbers vary by industry. Find and compare NPS averages for the same industry or service.

For example, according to NTT Com’s NPS Industry Ranking Top Companies 2020, Life Net Super ranks first in the Net Supermarket category with an NPS of 3.1pt, but the industry average is -19.7pt. (Reference: NTT Com Online Marketing Solutions Co., Ltd.　NPS Industry Ranking Top Companies 2020 )

NPS tool introduction

Mopinion

Data collection/reporting and analysis/behavior management are possible. It features a variety of customization options, allowing you to customize it to suit your purpose.
14-day free trial with minimum monthly pricing starting at $89

Wootric

It is a service that allows you to easily analyze numerical values ​​such as customer satisfaction and NPS®️.
You can collect feedback in a variety of ways, including email and SMS.
It also features a free plan.

NPS Consulting

Consulting that provides total support for the introduction, operation, and establishment of NPS. We have a complete support system in place, so even people measuring NPS for the first time can do it with peace of mind.Use NPS to understand customer preferences!

This time, I introduced the meaning of NPS, the calculation method, the difference from CS, the usage method, and the tool.

It is effective only when you devise and implement improvement measures to increase the number of promoters and reduce the number of detractors, rather than just providing NPS figures.

Let’s increase the number of fans by executing an action plan for improvement rather than just giving numerical values.