NPS Metric: What Does NPS Stand For And How To Calculate It?
What does NPS metric mean? How do I calculate NPS? Is my NPS score good or bad?
If you’ve been asking yourself these questions, you’re in the right place.
Here are the basics of collecting customer feedback using the Net Promoter Score (NPS).
Editors note: for a more in-depth overview of everything you need to know about NPS check out our Net Promoter Score guide here
Contents
- What does the NPS metric stand for?
- How is the NPS metric measured?
- How to interpret the NPS metric?
- What is a good NPS metric?
- What is a bad NPS metric?
What does the NPS metric stand for?
NPS stands for net promoter score. An NPS metric tracks user sentiment on your product and the likelihood of them recommending it to friends, on a scale of 0–10 (with 10 being most likely).
Alongside NPS metric, other survey types for measuring user sentiment include:
- CES survey: measures customer effort score
- CSAT survey: measures customer satisfaction score
- PMF survey: measures product-market fit
How is the NPS metric measured?
Gathering NPS data starts with a simple question:
“On a scale from 1 to 10, how likely would you be to recommend product x to a friend or colleague?’’
To calculate the NPS metric you need to subtract the percentage of detractors from the percentage of promoters.
The net promoter score can range anywhere between -100 to 100 depending on your promoter-detractor ratio.
A common practice is to use a follow-up question after your initial quantitative question. This way, you can gather insights into why the user gave a specific score and act on it.
NPS metric: Detractors
Detractors are users who respond 6 or lower on your NPS survey. They are not likely to recommend your product either because they are experiencing issues with your product or can’t see the value in it.
Addressing detractor concerns can be the quickest way to reduce your churn rate.
NPS metric: Passives
Passives are users who respond with a score of 7–8 on your NPS survey. They are generally satisfied but not very enthusiastic about the product.
Passives are not included in the NPS metric calculation.
Turn them into promoters by bringing them to the “AHA moment”.
NPS metric: Promoters
Promoters are users that respond with a score of 9–10 on your NPS survey. These are the customers who love your product and are getting continuous value from using your product
These are the users with high loyalty who will continue to bring revenue in and refer new users to the company (thus fueling growth even further).
Figure out what they like most about your product and build on those strengths.
How to interpret the NPS metric
The NPS metric ranges between -100 and 100. Your NPS metric will be negative when you have more detractors than promoters, and positive when the opposite is true.
The NPS score varies across industries and checking what the average is for your industry can give you some insight into what’s a good or bad score.
However, while it’s true that specific industries have an average NPS, you don’t have to rely on comparison to gauge your efficacy. Checking for the average can give you a basic idea of what’s a decent score — just be careful not to lose the bigger picture!
Surpassing the NPS score of your competitors is always nice but it’s actually more important that you’re consistently improving on your previous performance. Your most important competition is yourself, rather than other businesses.
What is a good NPS metric?
According to NICE Satmetrix NPS 2021 benchmarks, a good NPS score for SaaS businesses is around 41.
The industry average used to be 30 just three years ago, so it just goes to show that the expectations of customers never stop rising as competition increases.
Of course, the industry leaders tend to have NPS metrics that are well above average. The chart below shows the companies with the highest NPS score in their respective niches.
What is a bad NPS metric?
A negative NPS score is bad since it means you have more detractors than promoters. This is an indicator that users don’t see value in your product.
Either your product needs to be improved or you’re targeting the wrong audience. In any case, focus on providing value to your customers rather than getting hung up on benchmarks.
If your product is suffering from low scores then reflect on the reasons why users are dissatisfied and act on them in order to improve your score. You can gather extra qualitative insights using the follow-up NPS question.
NPS metric follow-up questions
The process doesn’t end after your customer submits their response. You should follow up with all three categories of users identified using your NPS survey.
Follow up on your promoters to get the most out of their loyalty, on passives to push them over the edge, and on detractors to fix the issue before you lose them.
If you use an in-app NPS metric collection tool like Userpilot, you can segment users based on their NPS score and personalize responses directly inside the app.
Read more on what you need to do after your NPS survey and get inspired with some great examples.
Conclusion
The net promoter score is far more than a fleeting dopamine hit for marketers or just another vanity metric. It’s is crucial toward understanding customer satisfaction and can steer campaigns down the right path.
The NPS metric — when applied properly — can improve your customer experience, boost your brand loyalty, and cut down your customer churn rates. It’s not the be-all-end-all of product marketing, but it’s a good starting point to develop better customer relationships.
Want to start measuring user sentiment with the NPS metric? Get a Userpilot Demo and see how you can do it directly inside your product without needing to code!
