Net Promoter Score

What is NPS?

The Net Promoter Score (NPS) is a simple and widely used customer satisfaction metric. It helps you understand how likely your customers are to recommend your business to others.

How is NPS measured?

NPS is measured through a survey that asks customers to provide a rating on a scale of 0 to 10 based on their experience. Based on the responses, customers are divided into three groups:

Promoters: These customers give a rating of 9 or 10. They are highly satisfied and enthusiastic about your store. They're likely to recommend it to others.
Passives: Customers who give a rating of 7 or 8 are considered passives. They are somewhat satisfied but not extremely loyal or likely to promote your store.
Detractors: Customers who give a rating of 0 to 6 are considered detractors. They are unhappy with their experience and may spread negative word of mouth about your store.
Calculation & Interpretation of the NPS score

To calculate the NPS score, subtract the percentage of detractors from the percentage of promoters. The result can range from -100 to +100. A higher score indicates more promoters and fewer detractors, which is ideal. NPS scores can be interpreted as follows:

NPS in last 30 days Interpretation
0-20 Very Poor
20-39 Poor
40-59 Okay
60-79 Good
80-100 Excellent
Why is calculating NPS important?

NPS is important because it gives you insights into customer loyalty, helps you identify areas for improvement, and provides a benchmark to track your performance over time. It can help you improve your revenue in the following ways:

Customer Loyalty and Retention: Identifying Promoters allows you to focus on building strong relationships with them, increasing their likelihood of repeat purchases and word-of-mouth recommendations.
Referral Marketing: Encouraging and incentivizing Promoters to refer friends and colleagues can drive new business without significant marketing costs.
Addressing Detractors: By proactively addressing Detractors’ concerns, you have an opportunity to turn them into satisfied customers & prevent revenue loss due to customer churn.
Targeted Improvement Efforts: You can effectively target your efforts towards Detractors & Passives by identifying common pain points and areas for improvement.
Competitive Advantage: By consistently calculating & improving your NPS, you are more likely to identify key differentiators and leverage them to stay ahead of your competition.
Tracking Performance Over Time: You can analyze the effectiveness of your sales & marketing efforts and adjust your strategies accordingly.
Customer-Centric Decision Making: NPS feedback can guide your choices, helping you to make more informed & customer-centric decisions that positively impact revenue.

NPS is a valuable tool that helps you understand your customers’ perceptions and drive improvements in your stores. By consistently measuring, analyzing, and acting on NPS feedback, small retailers can enhance customer loyalty, attract new customers, and ultimately improve your revenue.