Net Promoter Score (NPS) is a key metric that measures how many of your customers are willing to recommend your business to their personal and/or professional social circle. eCommerce businesses use NPS to gauge customer loyalty, satisfaction, and enthusiasm for their company. The higher your NPS, the higher the chance your customer referrals will convert into new leads, hence into more sales and revenue for your business.
How to calculate NPS?
NPS is calculated to measure the likelihood of your customers recommending your products and services to other people.
NPS calculation is carried out in two steps:
Step 1: Use simple customer satisfaction surveys to receive general feedback on your company. Ask your customers, “how likely are they to recommend your brand to a friend on a scale of 1 to 10?” Once you have received a significant number of responses, categorize them into the following:
- Promoters – People giving 9 or 10 who would most likely share and recommend your brand to others
- Passage – People giving 7 or 8 who may or may not share or recommend your brand to others
- Detractors – People giving a score between 0 and 6 who most likely would not share and recommend your brand to others
Step 2: Once categorization is done, subtract the percentage of promoters from the percentage of detractors.
For example, if you collected 100 responses and 80 were promoters, and 20 were detractors, then,
NPS = 80% - 20% = 60%
So, the formula for calculating NPS is,
NPS = % Promoters - % Detractors