NPS can be a waste of time if not used properly

 What is the NPS?

The Net Promotor Score is a measure of the number of promoters of your product. It is a very simple matrix that tells you how your product is perceived overall by end users — it is the overarching feedback, the north star of any product.
In a single number, it tells you whether your product’s consumers are promoters or distractors.

Why NPS?

Simple for the user
It’s just a one-line question: “How likely would you recommend [the product, service, or brand] to a friend or colleague? The user has to give his feedback in the form of a rating on an 11-point scale from 0–10. That’s it
One line question and 1 tap to answer, simple and easy.

General feedback

The NPS provides general feedback on the product as the question is very generic
An example of the Google Pay NPS would be to include the
UX of the product
Ease of payment
Ease of dealing with service refusals/errors
Security of payment

Benchmarking against competitor

NPS helps benchmark your product against direct competitors

Example: The NPS of OLA /UBER/Didi can directly show the relative position of these companies, as all three are in the same business of on-demand taxis for commuters.

How to calculate the NPS?

Customers give a rating between 0–10. These customers are categorized in three.

Promoters Customers who have given 9–10 points are considered promoters. They are very satisfied with your product and are very likely to recommend it to others (word of mouth)
Passives Customers with a score of 7–8 are called passives. These customers are satisfied with your product/service but may switch to a competitor if they get a slightly better offer
Detractors Customers with a score of 0–6 are Distractors. They are actively dissatisfied customers and can damage the brand through negative word-of-mouth publicity.
The calculation is also very simple and is done in three steps
For ease of understanding, let us assume that we have 200 NPS feedbacks, of which 48 are Promoters, 120 as Passives, and 32 as Distractors.
There are three steps to arrive at an NPS

1: Calculate the percentage of promoters, in our case it is
24%
2: Calculate the percentage of distractors, In our case, it is 16

NPS is the percentage of promoters — the percentage of distractors in our case it is 24–16=8
8 is the NPS (net promoter score)

Many product managers confuse NPS with the percentage of promoters. This is not the percentage of supporters, but an index calculated by subtracting the distractors from the promoters
Theoretically, the NPS can range between -100 and 100

What is a good NPS score?
NPS of 100 is best because it means that all customers of your product are promoters and would recommend the product to friends and family. However, practically this is not possible and it also means that your product only reaches a very small group of customers and there is a lot of scope to reach other customer groups at least passives may be in different geographies different ethnicity, different economic level, etc

There is no one answer to the question of a good NPS, it depends on the industry. It also depends on how you sell the product/service.

Limitation of NPS

It only says what, not how or why
This score only says something about the net promoters, but nothing about what is the cause of a low or high score. What are the possibilities for improvement?

Oversimplified feedback
There are many levels between promoter and distractor, but we cannot get information about them. Also, we are ignoring the complexity of the human brain: I may not like the product, but having been in a situation where I recommended the product to others.
In a study by HBR on NPS, it was found that users behave as both promoters and distractors simultaneously. So someone recommended Spotify to their friends because it was cool and easy, but not to their parents. After all, it might be difficult for them to use and expensive as they are retired.

When to take NPS feedback?
Since NPS is very general feedback about overall user experience with all touch points of the product/service delivery process. it is always better to ask the NPS when the product is delivered and used by the user, and if it is a service, when it has been fully provided
For example, e-commerce companies should ask the NPS when the product has been successfully delivered
Service companies, such as ed-tech, should ask the NPS after the course has been completed.

How to get the maximum benefit from the NPS?

Make it a two-step form.

Step 1: In the first step, ask for the NPS score

Step 2: In the second step, ask for the reason for this score (this is optional). This would help you get actionable feedback in addition to the NPS score

Go through the feedback from all promoters to find out which feature promoters like the most.

Go through the distractors’ feedback to identify the gaps between user expectations and product performance.

Make a product plan to address some of this feedback after measuring their impact and product roadmap

Measure the NPS once a month or once a quarter, make changes to the product based on the feedback, and see how these changes affect the overall NPS score

It is not advisable to be obsessed with NPS, but it is a North Star matrix that should be tracked closely at the PM and CEO levels.