Customer experience is one of the most important factors leading to the success of startups. One of the ways to measure and evaluate the amount of this factor is done by the key performance indicator of Net Promoter Score (NPS). Measuring the KPI of Net Promoter Score (NPS) includes answering the following questions: how loyal are customers to your brand? How engaged are they in your brand? How satisfied are they with the way you offer your product and service? Are they willing to recommend your brand to others or not?
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What is Net Promoter Score (NPS) and how is it calculated?
The key performance indicator of Net Promoter Score (NPS) is a metrics measuring the extent to which customers are willing to recommend a business product or service to others. Simply put, how satisfied are your customers with your product or service and if they would like to introduce it to their friends and relatives?
Although the key performance indicator of Net Promoter Score (NPS) is a measure of overall customer satisfaction with the product or service of the startup, and can be considered as a key performance indicator related to the product, but since the calculation of the Net Promoter Score (NPS) is directly related to customer loyalty to the product and service, it is better for this indicator to be assumed in the category of key performance indicators related to the customer.
The key performance indicator of Net Promoter Score (NPS) is calculated using the following formula, usually between 3 and 6 month intervals:
Net Promoter Score (NPS) = ((number of protesters – number of promoters) / number of people participating in the survey) * 100
How to Calculate Net Promoter Score (NPS):
The key performance indicator of Net Promoter Score (NPS) is calculated through two simple questions asked from customers:
Question 1: How likely is it that you will recommend the use of our goods or services to your friends and acquaintances?
The answer to this question is a score ranging from zero, equal to very low, to 10, equal to very high.
Question 2: What is the reason for this score?
In response to this question, the customer states his reasons for giving scores to the previous question, and his suggestions, comments or criticisms, if any, about his user experience.
After answering the questions by the customers, the customers are divided into three categories based on the given scores:
Enthusiastic customers: Promoters are those customers who have given a score of 9 or 10 to the first question. These customers are among the loyal customers of your business who have had a good user experience of your product or service. Research shows that about 20 to 60 percent of the growth of startups is due to the key performance indicator of Net Promoter Score (NPS). You can ask your enthusiast customers to share their experiences and opinions on social media or the related websites.
Unenthusiastic customers: They are those customers who have given a score of zero to 6 to the first question. These customers indicate that your business should seek to increase customer satisfaction. Startups should maintain their interactions with this group of customers, investigate the causes of low scores and work to eliminate the problems in the future.
Passive Customers: Passive customers are those customers who have given your business a score of 7 or 8 based on their experience of your product or service. In analyzing Net Promoter Score, these customers will not actually make any profit or loss for your business, but since these customers have a mediocre experience of your service or product, you can make the right decisions to lead them towards being promoting customers.
Some of the most important benefits of using the key performance indicator of Net Promoter Score (NPS) include the simplicity and cost-effectiveness of using this method, ease of response and access to customers, high response rate by customers and increased loyalty.
Although based on the aforementioned reasons, the key performance indicator of Net Promoter Score (NPS) is one of the easiest ways to measure loyalty in startups, it should also be noted that not all customers necessarily participate in the survey of Net Promoter Score (NPS), and your business will be unaware of the experience of some of its customers. One way to increase customer participation in measuring NPS is the simple and appropriate design of the survey questionnaire.
According to global standards, if Net Promoter Score (NPS) is 50% or more, it indicates the excellent customer loyalty of that business, and if this rate is above 70 %, it indicates a high level of business success. For example, the KPI of Net Promoter Score (NPS) for Amazon is 69%, while for Apple’s iPhone, MacBook and iPad, it is 70, 76 and 65 %, respectively.
What are the key performance indicators related to Net Promoter Score (NPS)?
Other key performance indicators in startups that can be measured alongside the key performance indicator of Net Promoter Score (NPS) include key performance indicators of Customer Churn Rate, Customer Retention Rate and Customer Efficiency Score which will be discussed in the following sections.
It should be noted that the selection of key performance indicators for a business is influenced by the maturity level of the business, the market in which it operates, the competitive environment and many other factors that require sufficient knowledge and experience. Retiba’s experts are ready to carefully evaluate your startup business model, select key performance indicators, and analyze your business performance. All you have to do is enter your information in the evaluation application form and wait for Retiba’s experts to contact you.
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