How NPS works? And why you should what it is
The long-story short of how it is calculated and why is it everywhere on the internet.
To start from the beginning: what is NPS?
NPS = Net Promoter Score.
Net refers to the amount remaining after certain adjustments have been made.
"Certain adjustments"… 🧐
You have already replied to NPS survey…
If you are an internet user you've been through a survey asking you "in a scale from 0 to 10, how likely are you to recommend our product to a friend or colleague" and sometimes requesting a reason:
Or if you work for a medium or big corporation you probably have heard or became aware that “NPS is super important for the business”.
What does NPS track?
One and only intent:
"How likely is a customer to recommend a product or service to a friend or colleague".
That’s it.
What does 1 to 10 mean?
You will always have to score from 0 to 10, where 10 is most likely to recommend.
If you ever gave a score from 0 to 6 to a brand, product or service, they will consider you a detractor. You will be a passive if you give a 7 or 8 and a promoter (yay!) if you give 9 or 10.
How is NPS Calculated?
NPS is calculated by subtracting the percentage of promoters from detractors from the total of responses 👀
NPS, therefore ranges from -100 to +100.
It looks complicated, but it is very easy and it will be explained below.
The calculations:
In the example below, there are 10 votes from 0 to 6:
In the case above, the NPS is -100. Got that? And you've just realised that you can remove the % symbols in the first step of the calculations that you will find the same -100. Or multiply by 100 and you remove the percentage 😎
Let's move on to the other example:
In the example above the user is considered a Passive. Even though there are 10 votes from 7 to 8, that score is not part of the calculations, meaning the NPS = 0.
Below you will see an extreme example with 1 million votes and take conclusions for yourself…
Since 7 and 8 are never part of the NPS calculations, even if there are a Million votes, it will not count and the NPS remains 0.
Below you will see what makes a NPS positive.
100% of votes from 9 to 10 creates a NPS of +100 ✨ ⚡️
In the next example you will find a real world scenario:
Out of 1070 votes this business got a score of +20 (rounding it up).
NPS just ignored 340 votes (the passives), but this will be discussed below for you to think about…
To think about (part 1)
You just realised (come on, you don't need to be the math guru) that passives are completely ignored in the calculations.
This means that you can be getting thousands of users voting from 7 to 8 (quite likely to recommend) but that represents nothing to the end results. This means that, for the NPS, the average of 7 and 8 is a zero (believe it or not).
To think about (part 2)
100 users giving a 0 = -100
100 users giving a 6 = -100
Is this capturing what users think?
To think about (part 3)
100 users giving a 9 =+100
Do we know if the users really recommended the product to a friend?
To think about (part 4)
If the experience is so bad, or if the user didn't accomplish his goal… will he vote from 0 to 6?
If this frustrated user doesn't vote, the NPS will be impacted positively, because there are no detractors to counter balance the % of promoters.
To think about (part 5)
Users are approximating that they'll recommend a product or service. They haven't actually recommended it. By the way, we can't even know if they will.
NPS is not about the actual experience, but about predicting future behaviour (by assuming that they are likely to recommend).
As a recap, NPS is always asking "How likely are you to recommend a product or service to a friend or colleague?"…
If at this point you are interested in improving your surveys because you also believe that predicting the future behaviour is too vague, I recommend you to start with two very easy and simple questions, based on the actual experience (Netflix did this, by the way):
- Recently, did you recommend us to a friend or family member?
- As a new user, were you recommended to us by a. friend or family member?
That will give you actionable insights that you can act upon instantly to improve the experience and track the success.
Are you using NPS for your business? Get the raw data, dig deep, check the numbers, read the reasons.
Are you an internet user? Now you know how it works, so use it wisely 😜
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