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What Is NPS and How Can You Use It to Improve Customer Satisfaction?

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Customer satisfaction is crucial for any business, and calculating your net promoter score (NPS) is a simple way to track it. In this article, we’ll go over what a customer satisfaction NPS rating is, how to calculate it, and how to use it to boost customer loyalty.
<img decoding="async" loading="lazy" class="alignnone wp-image-24272 size-large" src="https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-1024x896.png" alt="" width="640" height="560" srcset="https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-1024x896.png 1024w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-300x263.png 300w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-768x672.png 768w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-571x500.png 571w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-360x315.png 360w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-160x140.png 160w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-350x306.png 350w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-100x88.png 100w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS-392x343.png 392w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/man-texting-a-business-NPS.png 1200w" sizes="(max-width: 640px) 100vw, 640px" />
<h2>What Is a Net Promoter Score?</h2>
NPS stands for net promoter score. This score measures customer loyalty and satisfaction, and you calculate it based on direct feedback from your customers. It is just one customer satisfaction metric that all companies should use when measuring customer loyalty. 
NPS is crucial and can give you insight into the future of your business. A high NPS indicates a healthy relationship with customers. That, in turn, means you are likely to experience business growth.
<h2>How Is NPS Calculated?</h2>
To calculate your NPS, start by polling your customers. You typically ask a question such as “How likely are you to recommend our product/service/company to family or friends?” You ask respondents to rate their answers on a scale of zero to ten. Then, you aggregate the responses.
After, calculate your NPS by dividing your responses into “detractors,” “passives,” and “promoters.” 
<ul>
<li style="font-weight: 400;" aria-level="1">Promoters are those who are extremely likely to recommend your business, giving you a 9 or 10 on the rating scale. </li>
<li style="font-weight: 400;" aria-level="1">Passives sit in the middle with scores of 7 or 8.</li>
<li style="font-weight: 400;" aria-level="1">Detractors are unlikely to recommend your company and give you a 6 or lower. </li>
</ul>
<img decoding="async" loading="lazy" class="alignnone wp-image-24273 size-large" src="https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-1024x427.png" alt="NPS Scale (1)" width="640" height="267" srcset="https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-1024x427.png 1024w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-300x125.png 300w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-768x320.png 768w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-600x250.png 600w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-360x150.png 360w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-160x67.png 160w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-350x146.png 350w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-100x42.png 100w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1-720x300.png 720w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/NPS-Scale-1-1.png 1440w" sizes="(max-width: 640px) 100vw, 640px" />
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You will need to calculate the percentage of respondents who are promoters and the percentage who are detractors to calculate the NPS. Then, use the following formula to calculate your NPS: 
NPS = Percent of respondents who are promoters &#8211; percent of respondents who are detractors
Your final NPS will be any number between -100 and 100. 
Once you know your NPS, you should check your industry average to see how you compare. You should also track your NPS over time to confirm it stays the same or improves.
The fact that the average NPS varies by industry is crucial. It means that even if you have a seemingly high NPS, it may not be as good as you think compared to the rest of your industry. It also means that even a slightly lower score may not be as bad as it seems if it is still better than your competitors’ scores.
<h2>How Your NPS Can Help Improve Customer Satisfaction</h2>
Your NPS and customer satisfaction go hand-in-hand. Simply put, the more satisfied your customers are, the more likely you are to have a high NPS. After all, satisfied customers are more likely to recommend your company to others.
The following are a few specific ways that you can use your NPS to improve customer satisfaction and, therefore, business growth. 
<h3>→ It Helps You Discover What Customers Think of Your Brand</h3>
At the most basic level, calculating your NPS lets you see what customers think about your brand. There is no more accurate way to know what customers believe than to ask them, and your NPS allows you to do so in a qualitative way. If your NPS is higher than the industry average, you are likely doing well in terms of customer service. But if it is lower than the NPS of your competitors, you likely have room for improvement.
<h3>→It Shows You Where There’s Room for Improvement </h3>
In addition to helping you determine what customers think of your brand, the NPS also gives you an opportunity to gather feedback about specific improvements your customers wish to see. 
For example, you can reach out to your detractors and ask them what they would like to change about your business. Or you could calculate the NPS as part of a larger survey that looks at satisfaction with various parts of your business. But don’t just reach out to the detractors; also reach out to passives. Remember that passives have a higher risk of silently churning, but reaching out can change that.
<h3>→It Measures the Likelihood of Repeat Business</h3>
In addition to measuring customer satisfaction and likely referrals, your NPS also measures how likely you are to have repeat business. After all, it is safe to assume that someone willing to recommend your brand to others will be a repeat customer.
<h3>→It Lets You Engage Promoters</h3>
Speaking of satisfied customers who are likely to recommend your business and be repeat customers, calculating your NPS also helps you engage these promoters. For example, if someone rates you a 9 or 10 on the NPS survey, you could ask for a testimonial or review. Or you could tell them about your referral marketing program.
<h2>How to Improve Your NPS</h2>
As you improve your NPS, you will also be improving your customer satisfaction. So, how do you go about doing both of these things? The following tips should lead to better responses on your next NPS survey. 
<h3>→Focus on Providing a Better Customer Experience</h3>
The absolute best way to improve your NPS is to improve the customer experience. Remember that people with a positive customer experience are more likely to rate you highly and recommend you to others.
The challenge here is knowing how to <a href="https://www.podium.com/article/customer-retention-tips/">improve the customer experience</a> (and your net promoter scores in the process). That’s where the next strategy comes into play.
<h3>→Encourage Customer Feedback So You Know Where to Improve</h3>
We mentioned that you can use the NPS to boost customer satisfaction by looking for areas of improvement. But this requires feedback. As such, <a href="https://www.podium.com/article/customer-feedback-loop/">encouraging customer feedback</a> is one of the many ways to improve your NPS. Ask customers to fill out surveys and write reviews. Send follow-up emails about satisfaction with products or services. Send a quick text survey to see where you went wrong and where you got it right. 
<h3>→Improve Customer Support</h3>
As you work to boost the customer experience, don’t forget about customer support. Make sure your team is easy to reach and has the training and information necessary to answer customers’ questions. For example, offer <a href="https://www.podium.com/webchat/">Webchat</a> or support via texting. Ask unhappy customers how they would like to reach the support team. 
<h3>→Use NPS Feedback in Training</h3>
Once you identify areas of improvement based on the feedback from NPS surveys, share that information with your team. They can’t improve unless they know there is an issue and how to address it. In other words, incorporate the feedback from the NPS into your training.
<h3>→Be Willing to Make Other Changes </h3>
<h3>The usefulness of feedback from NPS customer surveys goes beyond training employees. It can also help you pinpoint areas where you need to make structural or major changes. Of course, you don’t want to make any major changes without a fair amount of feedback indicating it is a good idea and careful analysis. But your NPS survey can help you find areas that may need this attention.</h3>
<img decoding="async" loading="lazy" class="alignnone wp-image-24276 size-large" src="https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-1024x896.png" alt="happy customers happy business" width="640" height="560" srcset="https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-1024x896.png 1024w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-300x263.png 300w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-768x672.png 768w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-571x500.png 571w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-360x315.png 360w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-160x140.png 160w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-350x306.png 350w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-100x88.png 100w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business-392x343.png 392w, https://cmsaustralia.wpengine.com/wp-content/uploads/2022/10/happy-customers-happy-business.png 1200w" sizes="(max-width: 640px) 100vw, 640px" />
<h2>Happy Customers Mean a Happy Business</h2>
Your net promoter score helps you measure customer satisfaction, giving you important insights into your business. You should always strive to improve or maintain your net promoter score thanks to its ability to predict company growth. 
Use tools like Podium to ensure you have loyal customers. Podium, for example, can help you with the customer journey via texting and <a href="https://www.podium.com/webchat/">Webchat</a> or by letting you respond to communications across channels in a single inbox.

What Is NPS and How Can You Use It to Improve Customer Satisfaction?

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