The Net Promoter Score or NPS is a survey that has been the go-to tool for measuring customer satisfaction for ages. Even though the method has been around for a long time, NPS has its limitations especially when used as a standalone tool to measure customer satisfaction.
This makes it crucial to explore other Customer Satisfaction metrics when building your CX program. Stay with us as we explore these methods and see how they can complement NPS.
In this blog, we're going to get deeper into what is NPS and how it is calculated. We’ll further chalk out the limitations of NPS and alternative methods for measuring customer satisfaction. In the end, we will share how to choose the right metric for your business for an effective CX strategy.
The Net Promoter Score or NPS is a metric used to measure customer satisfaction. NPS is a simple tool that helps businesses understand how likely their customers are to recommend their products or services to others.
NPS is calculated based on a single question- On a scale of 0 to 10, how likely are you to recommend our company/product/service to a friend?
Customers select a number out of the range and are categorized into three groups:
To calculate NPS, subtract the percentage of Detractors from the percentage of Promoters.
Here’s the formula to calculate NPS
NPS=%Promoters−%Detractors
The score can range from -100 (if every customer is a Detractor) to +100 (if every customer is a Promoter).
While NPS gives a quick snapshot of overall customer satisfaction. It is a bit too simplistic. After all, the score is just a single digit, and that can be pretty limiting.
Think about this- What can make a consumer score from passive to promoters? What are some things that the promoters love about your business? What are the key points that are making your customers unhappy?
We reached out to Ben Segal, CXO at Create CX, an end-to-end customer experience consulting firm that specializes in connecting CX technology to the human side of every business through their advisory services and boutique offshore staffing arm. They have implemented and optimized Hark for several clients, including HigherDOSE, Chomps, and Promix Nutrition.
Here’s what he had to say about NPS as an indicator of customer satisfaction, “While NPS is an important metric for gauging customer loyalty, it is often a lagging indicator rather than a predictive one. It tends to oversimplify the complexities of customer satisfaction and lacks actionable insights.”
Let’s break this down for you.
NPS takes the rich, complex world of customer satisfaction and boils it down to a single digit. A score of 7 on NPS can mean different things to different people. For one customer, it might mean they’re reasonably satisfied but see areas for improvement. For another, it could signal they’re unsure and might consider alternatives.
And then there are the categories (Promoters, Passives, Detractors). They’re pretty broad. Someone who rates you a 6 (a Detractor) might have had a completely different experience than someone who gives you a 0, but they both end up in the same category.
So, while NPS is handy for a quick gauge, it might not give you the full picture you need to truly understand and improve your customers’ experiences.
NPS tells you how likely your customers are to recommend you, but it doesn’t tell you why they feel that way. Without understanding the 'why' behind the score, it's tough to take meaningful actions to improve your customer experience.
Did they love your product but hate your customer service? Was the price too high but the quality excellent? You don’t get these insights from a single number. NPS doesn't capture nuances like how easy it was for customers to solve their problems or how they felt about specific interactions with your team.
For example, one customer gives you a 9 on the NPS survey because they adore your product’s effectiveness but found the shipping process slow. Another customer gives you a 9 because they had an amazing experience with your customer service team, even though the product itself was just okay. Both are Promoters, but their experiences and the areas for improvement are completely different.
CSAT is a quick check-in after a specific interaction with your brand, whether it's a purchase, a support call, or using a service. Much like NPS, it asks customers to rate their satisfaction on a scale. This scale is usually from 1 to 5 stars or sometimes with a percentage. It's great for pinpointing how customers feel about a particular experience, giving you focused feedback on what went well and where you might need to improve. This direct feedback can be more immediate and actionable compared to the broader strokes of NPS.
CES focuses on one big question—how easy or difficult was it for customers to get things done with your company? It focuses on the effort required from customers to solve their problems or complete a task. This score highlights areas where you can make interactions smoother and more efficient. Unlike NPS, which provides a general satisfaction score, CES digs into specific pain points that might be frustrating your customers.
It measures the percentage of customers who stop using your product or service over a period—kind of like how many subscribers cancel their streaming service. A high churn rate signals trouble. Unlike NPS, which might not directly predict churn, this metric gives a tangible measure of customer retention issues.
CLV goes beyond satisfaction scores—it predicts the total revenue a customer will generate over their entire relationship with your business. It factors in not just how happy they are but also their buying behavior over time. Unlike NPS, which gives a snapshot of customer sentiment at a specific point in time, CLV provides a long-term view of customer worth.
These are your detailed questionnaires that dive deep into what customers think. These surveys dig deeper than NPS by asking customers detailed questions about their experiences and preferences. They uncover the 'why' behind satisfaction levels, giving you rich, qualitative insights to drive targeted improvements.
Social media listening taps into conversations happening across media. It’s real-time VoC data straight from the people who matter—your customers. Unlike NPS surveys, which can feel scripted, social media captures spontaneous, authentic opinions.
Customers can review you on a number of platforms like Google Reviews, App Store, Play Store, Amazon, etc. These reviews offer unfiltered insights into what customers love and what they don’t. Reviews and ratings provide a real-world snapshot of customer sentiment, helping you spot trends and address concerns head-on.
Visualize the entire customer experience from start to finish. Customer journey mapping highlights every touchpoint and interaction, revealing where customers might get frustrated or delighted. It’s like seeing your brand through your customers' eyes, pinpointing areas for improvement that NPS might overlook.
Using advanced tech like AI, sentiment analysis decodes the emotional tone of customer feedback. It goes beyond numerical ratings to understand whether customers feel positive, negative, or neutral. This deeper insight helps you tailor your responses and strategies to match customer sentiment effectively.
Choosing the right metric for your business isn't a one-size-fits-all process; it involves a thoughtful combination of understanding your objectives, assessing your industry dynamics, and being ready to test and iterate.
Segal captures this perfectly;
I have learned the importance of seeing the whole customer journey more holistically. This is why I am a strong advocate for tools like Hark, which provides a richer, more nuanced picture of customer sentiment by integrating photos, videos, and audio alongside traditional surveys. Pairing these insights with classic NPS surveys allows for a comprehensive view that can drive more informed and effective decisions.
First things first, you need to get crystal clear on your business objectives. Are you aiming to increase customer loyalty, reduce churn, or improve overall customer satisfaction? There can be multiple objectives too, but it’s important to identify all of them.
Next, take a good look at your industry and its benchmarks. What works for a tech startup might not work for a luxury spa. Industry benchmarks can provide valuable insights into which metrics are most relevant and impactful in your business.
As Segal rightly pointed out to look at the whole journey holistically. He further adds;
My choice tool will combine the depth of data provided by Hark with the benchmarking capabilities of NPS. This approach ensures we not only understand customer satisfaction but also predict and enhance future customer experiences.
Finally, remember that choosing the right metric isn’t a one-time task. Monitor their performance and gather feedback from within the organization. Don’t be afraid to tweak and adjust as you go along.
Curious to see what Hark can do for your business? Discover how Hark integrates rich media and traditional surveys for a comprehensive view Schedule a demo with us today.
Want to boost your customer experience? Explore Create CX for tailored solutions that fit your business goals and industry benchmarks.
NPS stands for Net Promoter Score. It's a metric used to measure customer loyalty and satisfaction based on the likelihood of customers recommending a company's product or service to others.
NPS scores can range from -100 to +100. A positive score indicates that you have more Promoters than Detractors, while a negative score suggests the opposite. Generally, a score above 0 is considered good, and scores above 50 are considered excellent. However, what constitutes a "good" score can vary depending on industry benchmarks and the specific context of your business.
Some benefits of using NPS include:
Yes, NPS can be used in a wide range of industries, including retail, hospitality, healthcare, finance, and more.
While NPS is a valuable metric for measuring customer loyalty, it's not the only metric you should consider. It's often used in conjunction with other metrics such as Customer Satisfaction Score (CSAT), Customer Effort Score (CES), and customer retention rate to gain a comprehensive understanding of customer satisfaction and loyalty.
The frequency of measuring NPS can vary depending on your business's needs and industry dynamics. Some companies measure NPS continuously in real-time, while others may conduct periodic surveys (e.g., quarterly or annually). The key is to ensure that measurements are frequent enough to capture meaningful trends and insights without overwhelming customers with survey requests.
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