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Using NPS

for your product

NPS or Net Promoter Score is used by many companies to gauge customer satisfaction. Who hasn’t come across a question like -

On a scale of 0 to 10, how likely are you to recommend our product / service to others?

I guess no one.

While almost every product (tech or otherwise) has added this question to their feedback form, the pressing problem here is how many of them are using the responses appropriately? Before I jump into how to use NPS, let me explain NPS briefly.

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Well, NPS was developed by Fred Reichheld as an alternative to traditional customer surveys. It is simple, easy to use and quick on follow ups. Simple because it is based around one ultimate question i.e how likely are going to refer the product to someone. Easy to use because it can be built into emails, messages, phone calls, app popups, etc. Finally quick on follow ups because it helps product managers and leaders quickly identify the problems and respond. 

 

Now how to calculate your NPS? A lot of PMs get this wrong. You do not simply average the scores from customer responses. If you have been doing this, sorry my friend, you have been doing it wrong so far. To calculate NPS, you first need to understand what each option in the likert scale means. Well NPS helps you classify your customers into 3 different groups. And the options the customers pick are representative of the group they fall into.

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01
Detractors
These are people who are dissatisfied with your product. On the likert scale, 0-3 (on a scale of 5) or 0-6 (on a scale of 10) usually mean detractors. Based on experience a surveyor can change the band for detractors. Detractors are bad for the product as they would not only drop out soon but will also recommend others not to use your product.
02
Passives
These are people who consider your product alright, but will switch if something better comes along. They are neither unhappy or happy with your product. On a likert scale of 10, 7-8 usually means passives.
03
Promoters
Customers scoring 9-10 are the promoters. They are the most happy, loyal customers. They’ll be your brand ambassadors and will recommend your product to others as well. They are your most valued customers
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To calculate NPS, you dismiss the passives and then subtract the % of detractors from the % of promoters. Let’s suppose you received 100 responses. 35 were between 0-6 (detractors). 20 were either 7 or 8 (passives) and 45 were either 9 or 10 (promoters). In that case - 

NPS = (promoters - detractors)/(total respondents) * 100

= (45 -35)/100 * 100

= 10

The NPS score can vary between -100 and 100. And having NPS > 0 is a good sign. 

But do you stop there? A smart product manager will not. You need to understand what does the NPS, and each of the three groups (Promoters, Passives and Detractors) mean for your product. 

I have tried to list them down as follows.

01
Love your Promoters
It’s good that you have promoters. Know that they are more than just long term customers. They are useful in marketing. They’ll be your ambassadors and will be promoting your product through word of mouth marketing. So you need to incentivise them with simple yet effective referral schemes. Since they like your product, they’ll be engaging with the product a lot more. It will be smart to get them involved in user generated content strategies.
02
Passives are troublesome
Passives can easily become detractors. For example a set of customers are on your platform only because you offer great discounts. Once your marketing budget is over or if competitors offer a better discount, they may detract. A smart product manager will like to identify all the possible scenarios which may turn the passives to detractors.
03
Talk with Detractors
Conversations with detractors helps understand what you are doing wrong. It’s often simple things like features not working, too many steps, or missing payment options or non-serviceability, etc. A smart product manager always schedules follow up conversations with detractors once they submit the NPS survey. Detractors can easily become promoters when the pain points are removed.
04
NPS is just an Overview
A smart product manager knows that NPS is a broad metric. It doesn't necessarily say if a product is good or bad. It says whether the customer’s perception about the product is good or bad. Perception can be influenced by marketing actions (like too many emails), branding (like a company's position on a national affair), customer service, or company’s reputation. And none of these are in the control of a product manager.

This brings us to a point where you might be thinking if you should consider NPS as a KPI for your product. My suggestion is NO. Then, what is it good for? Well, NPS opens the door for further actions. Actions like incentivising Promoters for word of mouth marketing, or identifying gaps through follow-up conversations with Detractors.

Until Next Time.

Author
AuthorJoydeep Sil

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