Product Management 101: NPS® scores
This is part of a series in which I am decluttering all my bookmarks and books on my wishlist, to turn all the resources into articles that everyone can access.
I made a presentation to Soldo (a fintech where I currently work as PM) using these resources in an all-hands meeting last month, so I thought I would make an article version of it on Medium as well.
What is an NPS® score?
First developed in 2003 by the Bain and Company consultancy, the NPS® method is the most common way to measure your customer experience and predict a business’ growth versus others in their industry. The premise is that customers who love your products/services will sing your praises, thereby marketing your products/services for free. If you have more ‘Promoters’ than you do ‘Detractor’ customers (i.e. customers who will advise people to not buy your products/services) then your business has a greater chance of success.
It measures customer perception based on one simple question: ‘How likely is it that you would recommend [Organisation X/Product Y/Service Z] to a friend or colleague?”.
How is an NPS® score calculated?
Your NPS® score is determined by subtracting the % of Detractors from the % of Promoters, which can range from a low of -100 (if all customers were Detractors) to +100 (if all customers were Promoters).
For example, if 10% of respondents are Detractors, 20% are Passives and 70% are Promoters, your NPS® score would be 70–10 = 60.
Different countries score differently:
It’s important to note that the NPS® score was primarily designed with US businesses and customers in mind.
I saw this play out when I worked at eVestment (a NASDAQ company in the finance industry), where we found that we hardly ever achieved ‘Promoter’ scores even though the comments we got were really positive. After speaking with customers and reading ‘The Culture Map’ book by Erin Meyer, we realised that France views a ‘good score’ very differently than the US. Overall, customers from France score businesses lower than those in the US because they have a culture of considering 9 or 10 scores being ‘impossibly high for a business’ to achieve, and thus would view 7 or 8 being a ‘Promoter’ score.
The more you try to apply the NPS® to international customers and/or businesses, the more you will encounter these differences in culture and will have to bear that in mind when you measure and track your score.
How do Product teams use NPS® scores?
NPS® surveys should be repeated every 90 days, varying the users you request from each time if you can so you don’t hear from the same users each time and users don’t get frustrated.
It works very well to quantify customer satisfation with your whole product or service, and can be used to compare your business against industry averages. Some Product teams go so far as using it as a KPI, but others might use it as more of a general indication of sentiment.
Atlassian (the company behind JIRA and Confluence) have a great guide on how they use the comments customers made in their NPS® surveys to inform product development and prioritise features, so I would recommend you read that here.
I would also note that you can reach out to ‘Promoters’ that gave you a great quote that can be used in your marketing, and Customer Service can help you in reaching out to ‘Detractors’ who mentioned specific reasons for their dissatisfaction.
5 Tools to issue NPS® surveys to your users:
These are the ones I have come across but please comment below if you can reccommend any others!
- Pendo (disclaimer: I use at Soldo and am a big fan -you can even integrate your Pendo NPS® results with a Slack channel)
- Delighted
- Survey Sparrow
- Hotjar
- Zendesk
Sources:
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