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NPS Calculator & How It Works?

NPS Calculator and How It Works?

Try our NPS Calculator for free: NPS Calculator

Net Promoter Score (NPS) is one of the easiest and effective ways to measure customer satisfaction and how likely they are to recommend your business to someone else. It consists of a short single-item survey that helps you identify customers who are most likely to recommend your business.

NPS has a lot of benefits that make it ideal for measuring customer satisfaction:

  • NPS works for all types of businesses
  • It is cost-effective and easy-to-administer
  • It shows you the big picture of your business at any given time
  • It shows how many of your customers are likely to recommend your business to their friends
  • You can track changes in the number of happy and unhappy customers over time
  • You can compare the NPS score with industry benchmarks to see how good you are doing.

These benefits make Net Promoter Score the best customer satisfaction score for businesses. If you are new to NPS and don’t know how to calculate NPS, this guide is for you. It covers everything about Net Promoter Score calculation, what question to ask, how to categorize responses, and how to compare scores with industry benchmarks.

NPS Calculation

You need to follow a systematic approach for NPS calculation. When you are dealing with hundreds of surveys, you should follow a step-by-step method to create and conduct a survey, categorize responses, calculate the score, compare it, and take action.

These are the 4-steps for NPS calculation:

  1. Survey your customers
  2. Categorize responses
  3. Calculate score
  4. Compare score

Try our NPS Calculator for free: NPS Calculator

Net Promoter Score calculator

Step #1: Survey Your Customers

It all begins by asking your customers a simple and straightforward question:

“How likely is that you would recommend us to a friend?”

nps calculator

You can change the wording but its recommended to use it as is. If you want to tweak it, make sure that the meaning of the question remains the same.

Provide your customers with an option to choose an appropriate number between 0 and 10. Clearly mention that lower numbers indicate Not Likely at All while high numbers indicate Extremely Likely.

You can also add a text box or blank space with the NPS question so customers can explain their response. Ask customers to share their feedback especially when they select a low number. This will help you figure out why they aren’t happy.

Here is an example of NPS survey by Slack:

slack nps example

There are multiple ways to distribute NPS survey such as:

  1. Email
  2. By post
  3. Social media
  4. Website

Step #2: Categorization

Categorizing responses is the next step. Net Promoter Score calculation involves identifying Promoters, Passives, and Detractors. Here is how to do it:

  • Promoters are the customers who respond with a score of 9 or 10. These are the customers who are most likely to recommend your business to a friend.
  • Passives are the ones that respond with a score of 7 or 8. These customers are likely to switch to another business if they find a better alternative.
  • Detractors are your customers that respond between 0 and 6. These are not satisfied with your business and need immediate attention.
nps calculator

The categorization of responses is essential for NPS calculation. If you are using a feedback tool or a survey tool, promoters, passives, and detractors will be identified automatically. But the tool won’t tell you how to interpret the outcomes.

Step #3: NPS Calculator

After categorization, its time to calculate NPS.

When you have the total number of respondents and the number of promoters, passives, and detractors, use the following formula to calculate NPS:

NPS = (Percentage of Promoters) – (Percentage of Detractors)

Note, you have to find the percentage of promoters and detractors and subtract the percentage of detractors from the percentage of promoters. Passives aren’t included in the NPS calculator.

Let’s assume, the total number of responses you received were 100 and they were categorized as follows:

  • Promoters = 30 (30%)
  • Passives = 50 (50%)
  • Detractors = 20 (20%)

The NPS score will be:

                = 30% – 20%

                = 10%

That’s all. You have calculated NPS score which is 10.

Try our NPS Calculator for free: NPS Calculator

Step #4: Comparison

So what does NPS 10 mean? Is it good? How to interpret it?

You can’t decide what’s a good NPS without comparing it with industry benchmarks. NPS 10 could be a decent score if you are in the internet services industry and it could be a bad NPS if you are in the banking industry.

NPS benchmark lets you compare your score and see how good or bad it is compared to other businesses in your industry. Read this post for NPS benchmarks.

Comparison is essential to make sense of your Net Promoter Score. It helps you understand where you stand in your industry and what type of decisions your business should take.

Generally, a high NPS means you have a high number of promoters which is a great sign for your business. A negative NPS means you have more detractors than promoters which isn’t a good sign for any business.

Techniques to Improve NPS

Irrespective of where you stand in the industry in terms of your NPS, there is always room for improvement. You should strive to get 100 NPS that will ensure that you don’t have any detractor. Yes, that’s an ideal situation that’s difficult to achieve but not impossible.

Having zero unhappy customers is all that businesses want, right?

Here are a few best practices and techniques that will help you improve NPS:

1. Engage Detractors

The best approach is to engage detractors and figure out what makes them unhappy. It could be your product, customer services, or anything else and the right way is to ask them.

Get in touch with detractors and ask them to share their feedback. Add a textbox with the NPS survey to let respondents share their feedback. You can also conduct in-depth interviews with a few customers to see what their major concerns are, what features they like, and so on.

In-depth interviews let you understand customers and their issues. And this makes it easier to see what’s wrong, what makes them churn, and how to fix issues.

2. Create a Loyalty Program

A loyalty program is your best bet to increase NPS. Statistics show that 73% of customers are more likely to recommend a brand with a great loyalty program and 79% of customers say that loyalty programs make them more likely to continue doing business with the brand.

Having a loyalty program for your brand will reduce churn and improve loyalty. Not only detractors but passives and promoters will stick to your business too. The best part: You get new customers easily as a loyalty program encourages your customers to refer your business to their friends.

3. Fair Pricing

Fair pricing is one of the top reasons why consumers are loyal to a brand. This makes it straightforward to improve brand loyalty and to convert detractors into promoters. Improve the pricing of your product and make it fair.

Fair pricing doesn’t necessarily mean price reduction. If your product is priced too low or too high, it won’t be appreciated. Consumers determine the price of a product based on their judgment. If your product is priced high and you can justify its price, that would be considered a fair price for your product.

You need to make sure the price is perceived fair by your customers, and they will stick with your brand.

Conclusion

Net Promoter Score is an ideal technique to measure customer satisfaction and to find loyal customers. If you use a survey too or NPS app to conduct the survey, you don’t have to do any manual work. The tools come with built-in NPS calculators.

However, if you are conducting NPS manually (e.g. by mail or in hard form), you will have to calculate NPS yourself. Use the NPS calculator to find the percentage of promoters and detractors. It can be done easily in Excel. Add responses in an Excel sheet and apply formula.

Whether manual or automatic, NPS will never disappoint you when done right.

Try our NPS Calculator for free: NPS Calculator

Sabih Javed

Sabih Javed is a certified inbound marketer and an experienced digital marketing writer. His publications appeared on leading marketing blogs like JeffBullas, Yahoo News, TheNextWeb, Business2Community, and more. Connect with him @sabihjavedd