How to calculate NPS in Excel?

Collecting and acting on NPS data will also help you to close deals and drive new customers to the business.

Jun 26, 2024 - 16:21

Besides the quality of products, services, and competitive pricing, Customer Experience is also a vital element that keeps your customers loyal to your brand or business. Walker predicts Customer Experience and Satisfaction as the brand differentiators. According to Walker “by the end of 2020*, price and product will be overtaken by customer experience and satisfaction as the key brand differentiators.”

A good Customer Experience not only leads to customer satisfaction but also reduces churn and increases customer retention. To improve Customer Experience, the first step is to measure it and one very popularly used Customer Experience Metrics used to measure Customer Experience through Loyalty is Net Promoter Score® (NPS). Businesses that invested heavily in Net Promoter Score® (NPS) have 1.6x higher brand awareness, 1.9x higher order value, 1.6x higher customer satisfaction, 1.7x higher customer retention.

What is Net Promoter Score® (NPS)?

The Net Promoter Score metric was introduced in the year 2003 by Fred Reichheld of Bain & Company as a new way to measure the level of loyalty based on the experience business offers to its customers. Net Promoter Score (NPS) metric measures loyalty by gauging the likelihood of customers to recommend a company’s Products, Services, or Brand to their friends or relatives. NPS ranges from -100 to 100. Along with customer loyalty, NPS also predicts the purchase and referral behavior of your customers.

Over the years, the Net Promoter Score metric has become the gold standard Customer Experience metric that more than two-thirds of the Fortune 1000 list currently use this metric to determine customer loyalty.

Benefits of Measuring the Net Promoter Score

83% of online respondents say they trust the recommendations of friends and family. The recommendations and reviews of friends and family have become a dominant element in the journey of customers. Let’s explore other benefits of measuring the NPS:

Measures Customer Loyalty

Whether your customers are loyal to your brand or not depends on many factors like good customer experience, quality-grade products & services, customer support services, etc. So, Net Promoter Score® helps you to know the customers’ perception regarding the above-mentioned factors. With just a standard NPS Question - How likely are you to recommend us to a friend or colleague? You can gauge their willingness to recommend your brands to others. Based on their likelihood of recommending your brand, you can test their loyalty.
Works as a Customer Satisfaction Indicator

NPS Survey is known for its versatility. It works as a Customer Satisfaction Indicator if it is used effectively. NPS helps you to capture instant real-time customer satisfaction at different touchpoints throughout the customer journey through Transactional NPS Surveys. These surveys help you to gauge customer satisfaction immediately after the specific interaction or transaction, or after any events like Post-Order, Post Ticket or Call Raised, Post-Delivery, and Post-interaction.
Finds Detractors, Passives, and Promoters

NPS Survey helps you to know the nature of your customers. Whether they are detractors (unhappy customers), Passives (Neutral customers), or Promoters (Happy Customers). When customers scale their likelihood of recommending your business on a scale of 1 to 10. If they give 0-6, they are Detractors, if 7-8, they are Passives and if they give 9-10, they are considered to be Promoters. Now after identifying the nature of your customers, you can quickly follow up with them and solve their queries to improve their experience and turn them into loyal customers.
Enables to Follow-up Customers

NPS Survey is divided into two crucial parts:

NPS Question - The standard NPS Question - How likely is it that you would recommend [Organization/Product/Service] to a friend or colleague?

Follow-up Questions - The reason for the Score - What is the primary reason for your score? So, answers to Follow-up questions help you to know the SWOT (Strength, Weakness, Opportunities, and Threats) associated with your business.

Asking follow-up questions from detractors, passives, and promoters has its significance. When you ask the reason for the score from your Detractors, they provide you with suggestions that contribute to enhancing product development potential along with the customer experience.

Measuring & Calculating the Net Promoter Score

To calculate the Net Promoter Score, you can use the standard NPS Calculation Formula established by Bain & Co. In this formula, you can calculate the Net Promoter Score by subtracting the percentage of detractors from the percentage of promoters, i.e. Net Promoter Score = % of Promoters - % of Detractors. Now after calculating the NPS check the Net Promoter Score Scale. Let’s understand the Net Promoter Score Scale.

Net Promoter Score Scale

In an NPS Survey, a score scale is provided to the customers where they can rate their likelihood of recommending your brand further. NPS Score Scale ranges from 1 to 10. Based on the perceived experience, customers give the score. Based on their responses, customers will be segregated into three categories.

Detractors (0-6)

They are considered to be unhappy & unsatisfied customers who give you a score from 0 to 6. Detractors never recommend you as a brand and your product/service to other potential buyers. They are likely to spread bad word of mouth for your brand.
Passives (7-8)

They give you 7 or 8 and are considered to be moderately satisfied customers. They neither promote your brand nor spread any negative word-of-mouth.
Promoters (9-10) -

They are happy & very satisfied customers who range their likelihood of recommending your business to 9 or 10. They will not only recommend your brand to others but also advocate your brand by spreading positive word of mouth for your business.