Maths and Science Behind NPS Response Rate: How Much is Enough?
Over time, businesses have made efforts to improve their performance in achieving Customer Satisfaction and providing the most elicit Customer Experience. Many businesses use various Customer Experience matrices for this. One such tool widely used today is the Net Promoter Score.
As per data from Lumoa, Net Promoter Score (NPS) is the most popular metric used for measuring customer experience and is used by two-thirds of companies. So, it is imperative to know what NPS is, what it does, how to create it, and how to improve it!
What is Net Promoter Score?
Net Promoter Score is an index for analyzing the satisfaction drawn by a customer while purchasing goods from your organization. This satisfaction is laced in the customer’s repeated purchases and recommendations of your products or services to others.
According to Oracle 2011, 86% of consumers are ready to pay more for achieving a better experience. A happy customer is likely to spend more time with a brand, invest more in its products, follow it diligently, and create trends for others to follow the same. And that’s how an organization can estimate if it’s magic is truly working on its customers or not.
This word of mouth is a powerful tool for your organization to know the potential customers and the likelihood of their conversion to actual buyers. Nielsen, 2015 estimates that 83% of customers would trust recommendations from the people they know: colleagues, family, friends, etc. and 66% would trust other consumer opinions posted online.
The Net Promoter Score is must know-how for any business. Ranging between -100 to 100, NPS is calculated using the NPS response rate which is derived from NPS surveys. The better the survey results, the more the Net Promoter Score.
So, with no further adieu, let’s dive in to see how NPS Response Rate works and how to achieve it!
NPS Response Rate
NPS Response Rate is an index in percentage value used for calculating the Net Promoter Score. This index is calculated on the basis of the NPS Survey which aims at gathering responses from the existing customers about their willingness to recommend your brand to others on a scale of 0–10.
The actively available responses from these surveys help you to calculate your NPS Response Rate. For the calculation of the NPS, the responses from the survey are divided into 3 parts: Detractors, Passives, and Promoters.
This division is based on the intensity of the customer’s willingness for the recommendation of your products.
NPS Response Rate is the percentage of responses received from the Promoters, Passives, and Detractors from the entire response bank.
These NPS Response Rates are then used in the calculation of Net Promoter Score.
Now that it is clear, what is Net Promoter Score and what NPS Response Rate is, let’s switch to knowing the Maths and Science Behind NPS Response Rate!
NPS Response Rate: The Maths and Science
NPS Response Rate calculation is not rocket science. Once you get the concept right, it’s easy and simple to calculate it. The thread of the NPS Response Rate index is tied to the NPS Survey. This survey is an important source of receiving one important response from your existing customers in regard to their willingness to recommend you to others.
The NPS question used will be of the kind:
“On a scale of 0–10, how likely are you to recommend our products?”
This scale is then divided into 3 segments:
These are those customers who particularly weren’t much satisfied with your products, so they aren’t willing to repurchase it. Also, they are likely to engage in negative mouth publicity for your brand and are at risk of leaving your product. They are potential for your competitors.
They are somewhat satisfied with your product. Although, they are not much satisfied that they might recommend your brand. Some might, some might mot. And wouldn’t be a source of negative word of mouth, but, they won’t be a source of appreciation either.
They are the best lot. They are enthusiastic about your product and they engage in positive word of mouth about it amongst their peers and family. They are the richest source of brand publicity.
How Net Promoter Score is calculated from NPS Response Rate
The calculation of the net promoter score is based on the NPS Response Rate calculation from the percentage of detractors and the promoters.
Percentage detractors is calculated by:
(No. of detractors/ No. of total respondents) * 100
Percentage promoters is calculated by:
(No. of promoters/ No. of total respondents) * 100
The Net Promoter Score will then be equal to:
% of Promoters — % of Detractors
Let’s take an example to get deeper insights into the concept of NPS. Suppose, total responses from your NPS survey amount to 100 of which 45 are promoters, 25 are detractors and 30 are passives.
The promoters % will be: 45/100*100 = 45%
The detractors % will be: 25/100*100 = 25%
Calculation of Net Promoter Score:
% of Promoters — % of Detractors = 45% — 25% = 20%
This amount can be positive (when promoters are more than detractors) and negative (when detractors are more than promoters).
Margin of Error
NPS Response Rate calculation and also the calculation of the Net Promoter Score is not difficult, but getting a reliable customer response rate is tricky. Irrespective of the total population of customers you target for an NPS survey, you will always end up receiving responses from a sample of the whole.
This sample may include more happy customers or more unhappy customers. Which will result in a biased NPS score which will be either higher or lower than what your actual score should be? This difference in the NPS score is known as the Margin of Error. Higher MoE is a sign of worry.
For NPS, Margin of Error can be calculated by:
Var (NPS) = (1-NPS)² * P/n + (0-NPS)² * N/n + (-1-NPS)² * D/n
Var is the Variance of NPS
N is the number of Neutrals
P is the number of Promoters
D is the number of Detractors, and
n is total respondents
Standard Error = under root Var (NPS) / under root n
Margin of Error = Standard Error * 2
This is the MoE for a (-1 to +1) NPS. To get this in the range of normal NPS you need to multiply it by 100.
Now, this Margin of Error is going to differ with the total number of respondents. For example,
Case 1: you collect 10 responses, 4 promoters, 3 neutrals, and 3 detractors, MoE becomes 52.6
Case 2: you collect 100 responses, 40 promoters, 30 neutrals, and 30 detractors, MoE reduces to 16.8
Case 3: you collect 1000 responses, 400 promoters, 300 neutrals and 300 detractors, MoE further goes down to 5.8
In each of these cases, the NPS remains 10. However, the variation in the score decreases significantly as the number of respondents increases. Thus, to increase the precision of the NPS campaign, by reducing MoE to half, the sample size must be increased 3.8 times.
NPS Survey: A Key to Determining NPS Response Rate!
According to a survey by Oracle 2018, around 63% of Customer Experience professionals make use of customer feedback as a tool to make decisions regarding investment in better products and services for better customer experiences.
And these surveys are key to estimating the NPS Response Rate. Surveys need to be properly designed to get insights into the customer’s most vivid behaviors and increase the customer response rate on these surveys.
NPS surveys can be either stand-alone or on-site surveys. You can have your customers fill in an NPS Survey every time they visit your website or you can send them a special NPS Survey on their e-mails. You can use one of the many software available to create such surveys, collect responses, store the data, and process it to calculate your NPS.
A good NPS questionnaire should not include only rating questions, rather it should be split into two distinct sections: a Rating section and an Open-ended section. A combination of these sections helps to achieve a good Customer response rate.
The rating section should include NPS questions related to the rating of your company, employees, and product or services by the customer. The open-ended section will include questions where the customer can provide their opinions about why they rated the way they did.
This will serve two ways: one, to provide you with data to create NPS and two, to know the reasons and scopes for improvement. You can use some popular NPS questions for creating a great NPS survey.
Best NPS questions You Should put on an NPS Survey
For your NPS Survey, the best NPS questions that can increase your customer response rate are:
- On a scale of 0–10, rate your willingness to recommend our brand to a friend?
- On a scale of 0–10, how likely are you to recommend our product/service to a friend?
- On a scale of 0–10, rate your interaction with our staff?
- What is the primary reason for your ratings of our products?
- What aspects of our products/services disappointed you in your experience with us?
- What more can we do to enhance your customer experience?
- Which features of the product attract you the most?
- Which features are the most useful for you?
- Customized Thank You Messages for Promoters, Passives, and Detractors.
These were the best NPS questions that you must incorporate in your questionnaire. Apart from them, you can add many other NPS questions on your own to enhance the quality of your NPS Survey.
What should be your average NPS response rate?
NPS Response Rate depends on the customer response rate for the NPS survey. Customer Response Rate is an important aspect of any survey. Unless your customers are willing to participate in a survey and provide their opinions on the same, none of your efforts at creating a handy survey for calculation of your net promoter score will actually yield results.
Certain findings can help us know the statistically valid survey response rate.
Acceptable Response Rates For Surveys
The customer response rate on surveys varies depending on different modes of creating, distributing, and collecting the survey data. According to Forrester, 2016, 39% of companies fail to regularly approach their customers for feedback about their interactions. And this is precisely where companies lose most of their customers.
SurveyAnyplace gives varied facts and findings regarding statistically valid survey response rates:
- Personalized efforts on surveys can help achieve acceptable response rates for surveys. In-person surveys have a response rate of 57%, while mail surveys get a 30% response rate.
- Survey response rates are related directly to survey length. A questionnaire of more than 12 questions or more than 5 minutes long, results in a 17% drop in Response Rate.
- Reminders along with surveys help increase acceptable response rates for surveys by 14%.
- The average statistically valid survey response rate is 33%.
Acceptable Response Rates For Surveys on NPS
NPS Response Rates are dependent on the NPS questions and the method of approaching the audience. Your practices and strategies can help you achieve as high as 60% NPS response rate while you can still be struggling at 10% with wrong or unsatisfactory practices.
On average, a statistically valid survey response rate for NPS Survey is between 30–50% and this is what most CX experts thrive to achieve. Now the question arises, how do you increase the NPS Response Rate?
The answer is right here…
How To Increase NPS Response Rate?
To get a boost in your NPS Response Rate and achieve acceptable response rates for surveys of NPS, you need to plan and strategize your survey process as follows:
- About 70% of customers seek personalization in all aspects of products, according to Linkdex. Thus, using Personalised survey templates can help.
- Using interactive and provoking subject lines to increase the email opening rate. Avoid using NPS Response Survey and other such phrases in subject lines.
- Address your customers by their names to make it personal. It boosts response rates by 30%.
- Use customer-friendly language in the mail and questionnaire. Avoid jargons.
- Make use of mobile surveys. As per data from IMImobile, 2018, 75% of people engage in surveys on their mobile.
- Address your mails from a real person and not the company or department.
- Use the Company domain for sending mails.
- Keep your survey short and engaging.
- Timing is important. According to Smart Insights, 23.63% of all email opens occur within the first hour of delivery, with the rate dropping to as low as 4.8% by the fourth hour and 0.63% by the 24th hour. Therefore, shoot the mails at the right time for a higher response rate.
- Use a survey channel that clusters your audience the best.
- Send reminders and thank you emails.
Apart from these tips on how to increase the nps response rate to achieve a statistically valid survey response rate, another important aspect is to be able to increase your overall Net Promoter Score. You can do so by:
- Try to increase Promoters for your brand. As per Temkin 2017, compared with the detractors, promoters are 4.2 times more likely to buy again, 5.6 times more likely to forgive a company after a mistake, and 7.2 times more likely to try a new offering.
- Focus on service aspects for customer satisfaction.
- Do not ignore customer feedback and complaints. Avoid them from becoming detractors.
- Be consistent in your efforts.
- Keep an eye on your NPS and track its progress regularly.
NPS has a direct relation to a company’s growth. This is because the trade-off between the costs that are required to be incurred on a detractor and the gain achieved from the word of mouth of a promoter shows the overall growth a company has achieved.
Data from Bain and Co. states that the Net Promoter Score accounts for 20% to 60% of a company’s organic growth rate. Thus, after knowing how net promoter score is calculated and how to increase NPS Response Rate, it is your duty to prudently implement these tips in your business and get perfect NPS!