“How was that for you?”,  he asks…. 

“Urm, well…” she replies…

Whilst asking for “feedback” can spoil the moment, (or possibly indicate that your “performance” was not all you’d hoped) –  measuring “customer” satisfaction in your business nonetheless is essential.

Customer satisfaction is a leading indicator of future demand and revenue. It gives a business an idea of how many customers will keep coming back year after year, and which ones will recommend your services to others. It’s important to measure and track customer satisfaction, as both positive and negative feedback can help a business direct their attention to features that matter the most to their customers.

Read on to discover how to measure customer satisfaction using the “Net Promoter Score”.

How to measure customer satisfaction

Measuring customer satisfaction is not easy. It’s often neglected by businesses because it can be burdensome to administer and to interpret. 

There are many aspects that contribute to customer satisfaction: quality, flexibility, delivery, service, cost, and more. While many of these performance aspects will be recorded anyway, customer satisfaction is instead about the customer’s “perception”.

Satisfaction = Perception – Expectations

Formally measuring, recording, and tracking customer satisfaction can be done in many ways. The most common nowadays is to ask for customer feedback online, leave a review, or with a customer satisfaction survey.

What is a “Net Promoter Score”?

The “Net Promoter Score” (NPS) is a ranking from zero to ten, with ten meaning a customer is a very keen “promoter” of your product or service. This is a common approach to measuring customer satisfaction, and involves asking customers how likely they are to recommend your product or service to someone else: a friend, colleague, or another business.

How is a Net Promoter Score calculated?

A Net Promoter Score is calculated by subtracting the percentage of “detractors” from the percentage of “promoters”. This means totalling the customers who are likely to promote your product or service and subtracting the customers who are likely to dissuade people from purchasing your product or service.

How to calculate Net Promoter Score

Follow these steps to calculate your Net Promoter Score:

1. Collect your data

Start by asking your customers the question: “How likely are you to recommend our product/service”. Make it as easy as possible for your customers to answer this question, and bear in mind that you may need to ask them multiple times to get a response. It could be as easy as sending out an email to your main client point of contact and asking them to select their answer from 0-10, or you could use an online client satisfaction survey tool to ask more detailed questions.

2. Calculate percentages

Once you’ve collected all the data, you need to calculate the percentage of “promoters”, “passives”, and “detractors”. Promoters are customers who score a nine or ten. Calculate this percentage by dividing the number of promoters by the total number of responses and then multiplying by 100. Repeat this for passives and detractors: passives are customers who score an eight or seven, and detractors are customers who score a six or less. 

3. Calculate the NPS

The Net Promoter Score is the percentage of promoters minus the percentage of detractors. For example, if you calculated 70% of your customers were promoters, 20% were passives, and 10% were detractors, then your NPS would be 70% – 10% = 60%.

Example calculation: Net Promoter Survey

A shoe factory sent a net promoter survey to their customers (high street and online retailers) asking how likely they are to recommend their products to other businesses. They received 120 responses, 85 of which were promoters, 13 were passives, and 22 were detractors. 

Calculating the percentages gives:

• 85/120 * 100 = 71% promoters,
• 13/120 * 100 = 11% passives, and
• 22/120 * 100 = 18% detractors.

So the shoe factory’s Net Promoter Score is 71% – 18% = 53%. Not bad, but there’s room for improvement!

What is a “good” Net Promoter Score?

A “good” Net Promoter Score for one industry might not be so good for another. According to Qualtrics, an American experience management company, most companies have an NPS score of between 31 and 50. The current average NPS for auto dealers hovers around 48, while the average NPS for internet service providers is just 16.

Ultimately, a positive NPS score means that more customers are likely to recommend you than to warn others against you, which is a good thing.

Seeking and acting on customer feedback, recording it, and tracking it over time lets you understand what keeps your customers coming back for more. Even the bad feedback from your unhappy customers is invaluable for directing your attention to the things that might be hurting you the most. A net promoter system is a great way to summarise how happy your customers are with your product or service by evaluating how likely they are to recommend your business to others.