NPS Calculation: Formula and Methods
Navigating customer sentiment is crucial for any business, and one effective way to measure it is through Net Promoter Score (NPS) calculation.
This insightful metric quantifies customer loyalty and satisfaction, which offers insights that help analyze your product’s success in meeting customer expectations.
In this article, we’ll dive into how to calculate Net Promoter Score with the formula and best methods to do it.
TL;DR
- Net Promoter Score (NPS) measures customer loyalty and satisfaction by asking customers if they would recommend a product to others.
- The 2 types of NPS are:
- Relational NPS (rNPS) assesses customer loyalty and satisfaction by focusing on ongoing relationships.
- Transactional NPS (tNPS) gauges customer satisfaction and loyalty by concentrating on specific interactions, like onboarding, customer support, etc.
- The Net Promoter Score formula is:
Net Promoter Score = %Promoters – %Detractors - There are 3 types of NPS respondents:
- Promoters: Respondents who give a score of 9 or 10 and are your loyal customers.
- Passives: Respondents who give a score of 7 or 8 and are your indifferent customers.
- Detractors: Respondents who give a score of 0 to 6 and are your unsatisfied customers.
- You can calculate NPS by:
- Using Excel or Google Sheets to organize the NPS responses using the COUNTIF formula and then calculate it using the formula (subtract the percentage of detractors from that of the promoters).
- Opting for an NPS calculator where you’ll need to input the NPS response data and automatically get the score.
- Using an NPS tool to easily trigger NPS surveys, collect valuable insights, and automatically visualize and analyze the NPS response data.
- Analyzing NPS survey results by reviewing the open-ended answers to the follow-up questions helps you understand customers’ reasonings.
- You should tag NPS responses based on the scoring and identify any common issues among passives and detractors.
- Leveraging NPS data to automate personalized responses can nurture customer relationships and boost retention rates.
- You can book a Userpilot demo to see how to do NPS calculations without hassle and get rich insights about your customer satisfaction with the NPS dashboard, tagging feature, and much more.
What is the Net Promoter Score (NPS)?
The Net Promoter Score (NPS) is a quantitative metric that measures customer loyalty and satisfaction. It asks customers: “How likely are you to recommend this company or product to a friend or colleague?”
Respondents then rate their likelihood on a scale from 0 to 10. This score provides valuable insights into customer sentiments and their willingness to advocate for your product.
What are the different types of NPS?
You can use NPS to capture customer sentiment tailored to specific contexts across the customer journey. This enables you to tailor your feedback gathering to specific interactions or relationships, allowing for more targeted improvements and strategic decisions.
So, let’s see two different types of NPS and their purposes in detail.
Relational NPS
The relational Net Promoter Score (rNPS), a.k.a. relationship NPS, is a strategic approach to measuring customer satisfaction and loyalty by focusing on ongoing relationships. It asks the NPS question to an existing customer by considering their long-term customer journeys.
Companies usually perform the relational NPS tests quarterly or annually by sending a relationship NPS survey. It measures the evolving relationship dynamics and captures the sentiment shifts as customers progress through their journey.
Relational NPS usually asks questions like, “How likely are you to recommend this product or service to your colleagues?”
Transactional NPS
The transactional Net Promoter Score (tNPS) aims to dive into the precise details of customer satisfaction for a specific product or within specific interactions. This NPS approach provides valuable insights into what you should improve to offer a better customer experience.
It asks customers to rate their experiences specifically related to any individual touchpoint. Whether it’s onboarding difficulty, feature effectiveness, or customer support quality, transactional NPS sheds light on what is working and what needs improvement.
For example, you can trigger a transactional NPS after your customers finish onboarding. The NPS question can be, “Based on your onboarding experience, how likely are you to recommend ABC Software to your colleagues on a scale of 0-10?”
What is the Net Promoter Score (NPS) formula calculation?
The formula for the Net Promoter Score (NPS) calculation is:
Net Promoter Score = %Promoters – %Detractors
Based on the NPS survey responses, you’ll need to subtract the percentage of promoters from that of the detractors. For example, 53% of your respondents answered 9 or 10, and 29% answered 6 or below. Your NPS is then 53 minus 29, which equals 24.
The NPS score can range from -100 to +100. Here, the higher the NPS score, the better your customer loyalty. There’s a mathematical possibility that your NPS score might result in a negative one, indicating the dire condition of customer loyalty.
Now, let’s look at the 3 types of scorers or respondents you’ll get from NPS surveys.
- Promoters: They are customers who give a score of 9 or 10 on the Net Promoter Score (NPS) scale. These loyal customers are highly satisfied with your products and are most likely to be your products’ advocates through positive word-of-mouth marketing and referrals.
- Passives: They are customers who provide NPS scores of 7 or 8. These customers are content with their experiences but less passionate than promoters. Their loyalty is moderate, and external factors like competitive options or evolving needs might influence their future choices. So you should remain wary about them and try to make them promoters with proactive action.
- Detractors: They rate your product or service between 0 and 6 on the NPS scale. These unhappy customers are at risk of discontinuing their usage of your offering. In the worst case, they could share their negative experiences with others. You should effectively address their concerns and take proactive action to satisfy them.
Net Promoter Score calculation methods
Let’s see the NPS calculation methods.
Use Excel or Google Sheets
Excel or Google Sheets can help you calculate your Net Promoter Score (NPS). Although tedious, it brings a practical and cost-efficient approach for businesses seeking to understand customer sentiment.
First, you need to begin by organizing your NPS survey response data into 3 distinct groups – Promoters, Passives, and Detractors. You should assign these categories’ responses to easily and accordingly classify them.
The next step is to find the percentage of each respondent category. You should use the COUNTIF formula to count the number or percentage of respondees failing that group. For instance, to count promoters (scoring 9 or 10), you can use the formula “=COUNTIF(range,”>=9″)”.
Finally, you need to subtract the percentage of detractors from the percentage of promoters using Excel or Google Sheets’ subtract formula. Then, the result you get is the Net Promoter Score.
You can get an NPS calculation template from various sites, like Genroe, to easily start calculating NPS.
Find an NPS calculator
An easier and more effective solution for calculating NPS is looking for an NPS calculator. It helps you bypass the manual work of sorting and calculating NPS to a great extent and focus on analyzing the results.
You need first to insert your NPS survey response data into the calculator. The calculator may require you to put specifically the number of promoters, passives, and detractors or the number of respondees for each score.
After entering your response data, simply press the “calculate” button. The NPS calculator, equipped with the necessary formula, performs the calculations in seconds.
For example, Userpilot has a free NPS online calculator. It needs you to put several respondees for each score available on the question (0 to 10). Then, you only need to press the “Calculate NPS” button to get your NPS result automatically.
Calculate NPS using a tool
A dedicated NPS tool can take your NPS effort to a far distance and streamline your overall process. This tool helps you extract critical insights from your customer feedback without stressing about data sorting and calculation.
You can utilize a free NPS survey template from tools like Userpilot. Userpilot also enables you to trigger NPS surveys with a follow-up question. This follow-up question helps you gather feedback and both quantitative and qualitative NPS data.
Userpilot will review the survey responses and automatically calculate the Net Promoter Score (NPS). It can visualize the NPS changes over time to help you easily spot any change or dissatisfaction in your customer base.
Bonus: How to analyze and act on NPS data?
Now that we’ve learned how to calculate the NPS scores, we’ve got some rewards for you. We’ll see how to analyze and act on the collected NPS data.
Analyze NPS survey results
Going through the qualitative responses of your NPS surveys offers insights into the reasonings behind NPS scores. You should review the customers’ open-ended answers to the NPS follow-up questions to understand their experiences, opinions, and pain points.
Tracking NPS scores changes over time, and the qualitative responses will show you the patterns or shifts in customer sentiment. These changes can also indicate the impact of your various initiatives, such as product enhancements or support improvements.
An NPS analytics dashboard is a good approach to tracking changes and analyzing qualitative responses over time.
Tag NPS responses to identify patterns
It’s essential for you to go beyond the score marker of promoters, detractors, and passives to uncover the whys of these scores. You should begin with tagging the NPS responses by giving them specific labels as per the common issues.
For example, we can see here the NPS responses have tags by the common issues, like usability, UX/ UI, customer support, etc. Knowing the most common issues helps you understand what to prioritize and work on.
Automate responses to increase customer retention
Customer retention is critical for SaaS businesses, as they mainly run on a recurring revenue model. In this regard, leveraging NPS data for offering automated responses will be a game changer for increasing retention.
The art of automation lies in its ability to personalize at scale. With NPS responses in hand, you can easily segment customers based on scores or response tags. Then, you should automatically trigger tailored responses that resonate with each segment’s unique needs. For instance, sending a thank-you note to promoters, a value-added offer to passives, or a prompt to assist detractors.
These personalized responses will make the customers feel valued, while you won’t need to do anything manually. It enables you to nurture good customer relationships, satisfy them, and improve your overall NPS score.
Conclusion
NPS calculation and results can be the gateway to unlocking valuable insights about your customer base and their satisfaction. With NPS results, you’re better equipped to take action to enhance your customer loyalty and satisfaction further.
Want to get started with NPS calculation? Get a Userpilot Demo and see how you can effortlessly calculate NPS and act on it.
