What is NPS?
NPS, or Net Promoter Score, is a customer satisfaction and loyalty metric that measures how likely customers are to recommend your products or services to others. NPS surveys ask customers the following question; “On a scale of 0 to 10, how likely are you to recommend our products and services to others?”. Responses received from NPS survey are applied for calculating the NPS score.
How is NPS Calculated?
Respondents are categorized into the following three groups based on the score the choose on the NPS survey:
Promoters : Respondents who pick 9 or 10 score
Promoters are highly satisfied customers who help draw in new potential customers to your business through referrals. They help enhance your brand image.
Passives: Respondents who pick 7 or 8 score
Passives do not have an effect on your company’s brand image as they are not likely to spread positive or negative news about your company to others.
Detractors: Respondents who choose a score between 0 and 6
Detractors are dissatisfied customers who are detrimental to your company and its brand image, as they may share their negative experiences with others, dissuading new potential customers from trying your products or services.
Once respondents have been categorized, the following formula can be used to calculate NPS: In
NPS Score = % of Promoters – % of Detractors
Instead of the formula, an online NPS Calculator can be used to calculate NPS. Voxco’s NPS Calculator is quick and easy to use, seamlessly calculating your NPS score.
NPS scores always range between -100 to +100. A negative score denotes that the company has more detractors than promoters and a positive score denotes the opposite.
What is CSAT?
CSAT, or Customer Satisfaction Score, is a customer satisfaction metric that measures how satisfied customers are with an organization’s products and/or services. A CSAT survey usually takes the form of a single-question survey where customers rate their satisfaction levels on a five-point likert scale.
How is CSAT Calculated?
CSAT surveys contain a variation of the following question:
“How much are you satisfied with our products/services?
This question is followed by the following five point likert scale:
- Very Satisfied
- Satisfied
- Neutral
- Unsatisfied
- Very Unsatisfied
Survey responses are used to calculate the CSAT score, using the following formula:
CSAT = (Satisfied Customers* ÷ Number of Customers Surveyed) x 100
*Satisfied customers are those respondents who chose “satisfied” or “very satisfied” on the CSAT survey.
CSAT scores are generally represented as a percentage. The higher the percentage, the better, as it indicates high levels of customer satisfaction.
Which is a Better CX Metric: NPS vs CSAT?
Though NPS and CSAT are both customer satisfaction metrics, they both serve two different purposes. NPS primarily measures customer loyalty, whereas CSAT measures a user’s overall satisfaction with a product or service.
CSAT is better suited to when you’re trying to understand what customers think of a specific product or service or when you want to measure the impact of changes to a specific product or service on customer satisfaction.
NPS, on the other hand, is better suited to when you’re trying to measure customer loyalty based on the end to end customer journey.
As they both serve different purposes, what is “better” depends on the context of what is trying to be measured and why it is being measured.
However, some research suggests that NPS is more a reliable and accurate customer satisfaction metric as NPS results can often be directly correlated with an organization’s profit. Additionally, as NPS creates a division of customers into groups of promoters, passives, and detractors, it allows you to evaluate NPS repetitively to take into account any changes that may occur within the groups over time.
NPS score data can be used to improve customer experience in order to turn detractors and passives into promoters, and to encourage promoters to increase the volume of referrals.
