What is NPS?

NPS, or Net Promoter Score, is a customer satisfaction metric that measures the likelihood of customers recommending a company’s products or services to others. An NPS survey usually contains one question, around the lines of; “On a scale of 0 to 10, how likely are you to recommend our products or services to others. NPS surveys may sometimes have more than one question in order to understand why respondents choose the scores they do. Websites like Qualtrics offer a more thorough explanation of NPS surveys, so make sure to look them up!

How is NPS Calculated?

Once respondents score the survey, they are categorized into the following three groups:

Promoters: Respondents who choose a score of 9 or 10

Promoters are highly satisfied customers. They are very beneficial to your company’s brand image as they spread their positive experiences with their friends, family, and/or colleagues, drawing in new potential customers.

Passives: Respondents who choose a score of 7 or 8

Passives are neither happy nor disappointed with their experience. They are unlikely to have any effect on your company’s brand image as their experience wasn’t bad or good enough to be shared with others.

Demoters: Respondents who choose a score between 0 and 6

Demoters are those customers who are very unhappy with their experience with your company and may possibly talk about their negative experiences to others. This may dissuade new customers from trying your products or services, making demoters very detrimental to your company and its brand image.

Once respondents are categorized, the following formula is used to calculate NPS:

NPS Score = % of Promoters – % of Detractors

 Alternatively, an NPS Calculator can be used to calculate your NPS score. With Voxco’s NPS Calculator, all you have to do is input your promoter, passives, and detractor count, and then click on “Calculate NPS”.

Our NPS calculator can calculate your NPS in the quickest and easiest way.

How does NPS Calculator Data Boost Customer Lifetime Value?

Customer lifetime value, or CLV, is a measure of the projected revenue that a customer will generate for a business during their lifetime with the business. This metric can help guide marketing budget allocations when effectively tied with other metrics, such as NPS.

The greater the lifetime value of customers, the more revenue the company is able to generate. NPS and Customer Lifetime Value are both connected because the higher your NPS score, the more likely customers are to stay loyal to you, extending their CLV. Not only does a high NPS score indicate a higher likelihood of loyalty, but it also indicates that more customers are promoting your business through referrals.

 Instead of considering just the value a single customer brings to your business, you should look at their value in addition to the value of the customers who buy from you because of a direct referral. These calculations will reflect the effect a high NPS score can have on customer lifetime value.

How to use NPS Calculator Data to Improve CLV?

NPS data can be used in many ways to improve your NPS score and your CLV. The data acquired from your NPS surveys can be used to improve CX for customers who are demoters or passives. You can reach out to these customers and ask them where the issue lies and how you may improve their customer experience.

Additionally, you can encourage promoters to talk about their positive experiences through blog posts or website reviews in order to increase their referral volume.

It is beneficial to send out NPS surveys that have more than one question so that you can understand why customers score you the way they do. This will help you understand why a customer had a bad experience with your company, providing you with the information you need to improve CX for them.

 

You can also map out customer journeys and send out NPS surveys at multiple different touchpoints, asking customers to rate the survey based on their experience at that touchpoint. For instance, if a customer just made a purchase on your website, you could send them an NPS survey to evaluate their experience. If they give you a bad NPS score then you will know which touchpoint is not meeting customer expectations. You can then reach out to the customers to close the feedback loop and try to understand what troubles they had at this touchpoint. Once you know where the issue lies, you can take necessary measures to improve CX, and increase your NPS.

Increasing your NPS score will inevitably increase customer loyalty and customer referrals, which will result in increased customer life value and revenue.

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