NPS: Measure of “Word-of-Mouth” marketing of your product or Startup.
If you think it’s not possible to measure the Word-of-Mouth marketing of a product or company? or
If you are frequently coming across tweets by founders telling their NPS but not sure what exactly NPS is? and How to calculate it.
Then this article is for you.
What is the Net Promoter Score(NPS)?
Contrary to the popular belief, It's not a score of “how well the experience of users is while using your product” instead it's a score that tells how strongly people recommend your product to others.
so it's more like the “measure of Word-of-Mouth” marketing of your product hence it is considered an important product KPI (key performance indicator) for your product/business.
It will be wrong if we say NPS does not at all depend on the experience of users. As it's understood, if users would like the experience of the product then there would be more chances of him/her recommending it to other people, which would ultimately affect the Net promoter Score.
As Jeff says:
“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.” — Jeff Bezos.
But
It's not necessary that “word of mouth” will always be in your favor because there is a great possibility that users won’t like your product and tell others as well not to use it, which is ultimately nothing but a negative word of– mouth and Don’t forget what Jeff said: Word of mouth is very powerful.
Hence after analyzing all the possibilities, 3 types of users/customers were identified under the NPS model:
- Promoters: Users who find the product that good that they recommend it to other people as well. (or you can say “Positive” word of mouth marketers.)
- Detractors: Users who don't like the product to the extent that they ask other people not to buy it. (or you can say “Negative” word of mouth marketers.)
- Passives: Users who are neither fascinated with your product nor have anything against it. They are just not excited enough to tell about it to others or probably lazy 😂 (hence “Neutral/Zero" word of mouth marketers.)
There are microphones in every product which silently hears who recommends the product and who doesn’t?🧐
I am just kidding, there is nothing of that sort. NPS is conducted through a survey that we get on our app/product something similar to the below picture👇🏻
Based on our rating, We are identified as one of the users: Promoters(9–10), Passives(7–8), Detractors(0–6).
How does NPS is calculated for the overall product?
We find Net promoter score by SUBTRACTING the detractor % from the promoter %. The passives are ignored because they don't play any role in word of mouth.
NPS=100 *(% of Promoters — % of Detractors)
For suppose we have come with the following distribution of responses from a survey:
- 70 customers rate their willingness to recommend as a 9–10.
- 10 customers rate their willingness to recommend as a 7–8.
- 20 customers rate their willingness to recommend as a 0–6.
NPS=100*(70–20)= 100*50%=50
Is 50 a good score? Well, it depends on industry to industry but Most industry averages are between 30 and 50. So Higher the NPS, the higher is the measure of good word of mouth of your product.
Mistakes to Avoid and Things to take care of while finding the NPS of the product?
- Finding NPS for the overall product can be sometimes misguiding as it can hide some of the useful insights with which you could have exactly found out which parts of your product need improvement.
Solution: Other than the overall product you can find NPS of particular segments also, which will help you understand where your product needs improvement.
Segments can be divided based on:
- Geographical Location: e.g. Users of Delhi using the product.
- User Persona: e.g. All the teachers using your Ed-Tech Product.
2. NPS is often criticized as “It’s just a rating, it doesn’t tell why people are not recommending the product”.
Solution: We can solve this problem by asking a follow-up question, “Why did you choose this rating?”.
3. Never bombard customers with an NPS survey within 1–2 days as it can be misleading based on the first impression of your product. Let the users get acquainted with the product first then timely place your survey.
4. Small sample size of the survey: Your survey should not have a very small size otherwise you will never be able to get a proper insight into your product, You can increase the sample size by using different channels like email, in-app prompt to make them a part of the survey.
Hence NPS is one of the best methods to know the perception of your customers towards your product and to measure “Word-of-Mouth” marketing of your product or Startup.
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