Everything you need to know about NPS and how it can be used to grow your business.
If you’ve ever done business with a company online, whether buying a product or service, interacting with customer support, or even signing up for and utilizing a free offer, you’ve probably been asked about the likelihood that you’d recommend that company or brand to a friend or colleague. The answer to that question determines what is known as a Net Promoter Score (NPS).
Net Promoter Score (NPS) is a customer loyalty metric that measures the willingness of clients to recommend a company’s products or services to others. It has become an essential tool for businesses looking to improve customer satisfaction and drive business growth.
The following is a comprehensive guide to Net Promoter Score. It will offer insight into Net Promoter Score results, its role in the client journey and determining customer satisfaction, and how there is true power in the Net Promoter Score to elicit growth.
Read on to learn everything there is to know about Net Promoter Score (NPS).
Defining Net Promoter Score (NPS)
NPS provides businesses with an innovative way of improving their perceptions.
Introduced in 2003 by Fred Reichheld, a consultant at Bain & Company, a worldwide management consulting firm, Net Promoter Score is a customer loyalty metric that measures customer satisfaction with and loyalty to a company’s products or services.
Reichheld first introduced the NPS system in an article published in “Harvard Business Review,” arguing that companies could understand a customer’s assets and liabilities by correlating subjective responses to objective numbers with client responses to internal priorities.
The NPS is a proprietary instrument developed by Fred Reichheld, who owns the NPS registered trademarks in conjunction with Bain & Company and Satmetrix.
The standard for gathering NPS data is a simple based on the original Bain & Company model, which asks some variation of this single question:
“On a scale of 0-10, how likely are you to recommend our product/service to a friend or colleague?”
The respondent then rates their likelihood on a scale of 0-10, with 0 being “not at all likely” and 10 being “extremely likely.”
Since its introduction, Net Promoter Score has become a popular customer experience metric used by companies across industries. In fact, Net Promoter Scores are widely considered the best customer experience measure available.
Net Promoter Score scale: detractors, passives, promoters
Based on their rating, respondents are divided into three groups:
- detractors (0-6 rating)
- passives (7-8 rating)
- promoters (9-10 rating)
Detractors are customers who give a score of 0 to 6. They are unhappy with the company’s products or services and are more likely to share negative feedback with others.
Passives are customers who give a score of 7 or 8. They are satisfied but not loyal and may switch to a competitor if a better offer is available.
Promoters are customers who give a score of 9 or 10. They are highly satisfied and loyal, and are more likely to recommend the company to others.
How to calculate Net Promoter Score
Net Promoter Scores are calculated by subtracting the detractor percentage of from the promoter percentage. Passives are excluded from the calculation.
A net promoter score calculation formula looks like this:
Net Promoter Score = (Number of Promoter Scores/Total Number of Respondents) – (Number of Detractor Scores/Total Number of Respondents)
Let’s test it out using hypothetical numbers:
Let’s imagine you surveyed 1000 users, and the NPS results were as follows:
- 200 detractors (0-6 rating)
- 100 passives (7-8 rating)
- 700 promoters (9-10 rating)
When you plug these numbers into the formula, it will look like this:
50 = (700/1000 [70%]) – (200/1000 [20%])
Your NPS score in this example would be 50.
How to read your NPS results
A positive score indicates more promoters than detractors, while a negative NPS means more detractors than promoters. Consistent negative scores can impede growth. The score can range from -100 to 100. However, the score alone is not enough to understand customer feedback. Analyzing verbatim responses from customers and identifying common themes can provide valuable insights for improving the customer experience.
Why is NPS important?
Net Promoter Score (NPS) is a crucial business growth predictor. By analyzing NPS scores, companies can gain significant insight into how audiences perceive their brand and make data-driven decisions to make service improvements that will impact a customer’s experience.
Higher scores often correlate with increased financial growth, customer retention, and positive word-of-mouth referrals.
A Net Promoter Score above industry averages indicates that the business fosters positive client relationships.
Who is the NPS Promoter?
In the context of the Net Promoter Score (NPS), a “promoter” is a survey respondent who gives a rating of 9 or 10 when surveyed. Promoters are considered loyal consumers who are satisfied with the product or service, believe that the company provides competitive offerings, and are likely to recommend it to others. Promoters are essential because they are enthusiastic customers who offer great value to a business.
Promoters are more likely to repurchase, spend more, and refer new customers, which can lead to increased revenue and growth. They are also more likely to provide positive feedback and defend the business against negative comments or criticism.
What can you measure with NPS?
Net Promoter Score (NPS) can measure customer loyalty and overall satisfaction with a company’s products or services. In addition, it provides insights into brand perception and the likelihood of repeat business or referrals.
The Net Promoter System can also reveal areas for improvement and help companies identify unhappy customers and brand evangelists while finding ways to understand the customer experience better.
Companies can track their Net Promoter Score over time to monitor customer perception and sentiment changes, allowing them to adjust their strategies accordingly. Additionally, the results from NPS measures a company’s performance against competitors and industry standards.
Overall, NPS results can be a powerful tool for businesses to assess customers’ experience and drive improvements in customer experience. However, for a complete picture of a company’s performance, NPS surveys should be combined with other analytics.
How to run an NPS survey and collect NPS feedback
Running an NPS survey involves a few key steps to ensure that you collect accurate and meaningful client feedback. Here are the basic steps to follow:
- Determine the scope and frequency of your survey: Decide which customers you want to survey (e.g., recent customers, all customers, etc.) and how often you wish to conduct the survey (e.g., quarterly, annually, etc.).
- Choose your survey format and tool: You can conduct your NPS survey through various channels, such as email, SMS, website popup, or phone call, usually as a follow-up after someone has dialed into one of your company’s call centers. Determine which channel is most appropriate for your audience, and choose a survey tool that can help you automate the process. There are many free tools available that allow businesses to design and implement surveys.
- Ask the NPS question: Ask your customers how likely they are to recommend your product or service to others on a scale of 0-10.
- Follow up with open-ended survey questions: After the NPS question, ask follow-up questions to understand why the consumer gave that score, what they liked and disliked about the product or service, and what suggestions they have for improvement.
- Analyze your NPS score: Calculate NPS scores by subtracting the percentage of detractors (unhappy customers) from the percentage of promoters. Then, analyze the numerical score to identify trends and opportunities for improvement.
- Take action on feedback: Share the results of the NPS survey with your team and take action on customer feedback. Use the feedback to improve your product or service and enhance the customer experience.
The role of demographic questions in NPS
Demographic questions in NPS surveys can help companies better understand how different customer segments perceive their products or services. By collecting information such as age, gender, income, and education level, companies can segment their NPS data and identify patterns in customer feedback across different groups. This can help companies tailor their marketing strategies and customer experience initiatives to specific demographics. Demographic data can also be used to identify potential areas of improvement for the company’s products or services based on the needs and preferences of different customer segments.
Using NPS to survey and measure employees (eNPS)
Net Promoter Score (NPS) is not just for measuring brand loyalty and satisfaction; it can also be used to survey and gauge employee satisfaction, known as eNPS. An eNPS survey is a simple, cost-effective, and efficient way to measure how employees feel about their work, the company, and their likelihood to recommend it as a workplace to others.
To run an eNPS survey, companies can use the same methodology as they would for a traditional NPS survey, with a simple question like, “On a scale of 0 to 10, how likely are you to recommend our company as a place to work?” followed by an open-ended question to gather feedback.
Respondents are then divided into the same three categories as in a traditional NPS survey:
- detractors (0-6 rating)
- passives (7-8 rating)
- promoters (9-10 rating)
In the same way you calculate Net Promoter Score, the eNPS score is calculated by subtracting the percentage of detractors from that of the promoters.
A high eNPS score indicates that employees are satisfied with their work and will likely recommend the company as a great workplace. Conversely, a low score may reveal issues that need to be addressed, such as low morale or poor workplace culture.
Collecting eNPS feedback regularly can help companies identify areas of improvement, track employee satisfaction over time, and create a more engaged workforce. It can also be a valuable tool for HR departments in identifying critical areas for investment in employee experience, retention, and recruitment efforts.
Net Promoter Score: Frequently Asked Questions
Here are some of the most frequently asked questions about Net Promoter Score surveys and NPS scores in general:
How is an NPS score calculated?
The Net Promoter Score (NPS) is calculated by subtracting the percentage of detractors (customers who rate the company 0-6) from the percentage of promoters (customers who rate the company 9-10). Passives (customers who rate the company 7-8) are not included in the calculation.
What is the NPS scoring scale?
The Net Promoter Score system scale ranges from -100 to +100. Respondents are grouped into three categories based on their scores: detractors, passives, and promoters. Scores between 0-6 are considered detractors, 7-8 are passives, and 9-10 are promoters.
The NPS score is calculated by subtracting the percentage of detractors from the percentage of promoters. That results in a score ranging from -100 (if all respondents are detractors) to +100 (if all respondents are promoters). The higher the NPS score, the better, as it indicates higher customer satisfaction and loyalty.
What is a good NPS score?
A good Net Promoter Score (NPS) varies by industry, but generally, a score of 50 or higher is considered excellent. Scores above 70 are exceptional.
Companies in the software industry typically have higher NPS scores, with top-performing companies often scoring in the 60-80 range. In contrast, retail companies and internet service providers usually have lower scores, with scores in the 30-50 range considered good.
Some companies with high scores include Apple, Tesla, and Amazon, while some with lower scores include Comcast and Wells Fargo.
It’s important to note that the NPS is just one metric, and companies should consider other factors, when evaluating overall performance.
How do you interpret NPS results?
Net Promoter Score (NPS) is a customer loyalty metric that measures how likely clients are to recommend a business to others. A high NPS score suggests customer satisfaction and loyalty, while a lower score indicates potential issues that must be addressed and may lead to issues like negative word-of-mouth about the brand.
What are typical questions in an NPS survey?
Typical questions in a Net Promoter Score (NPS) survey focus on customers’ likelihood to recommend a business to others. The most common NPS question is, “On a scale of 0-10, how likely are you to recommend our product/service to a friend or colleague?”
Additional follow-up questions may ask why the customer gave that rating and what improvements could be made. Demographic questions, such as age and gender, may also be included to identify trends when measuring customer allegiance.
Surveys should always be short and focused on encouraging higher response rates.
Are NPS surveys worth it?
Net Promoter Score (NPS) surveys can be a reliable predictor for businesses to gauge customer loyalty and satisfaction. They provide a simple and standardized metric for measuring consumer sentiment and identifying areas for improvement. However, NPS surveys should not be the only tool used to assess customer experience, and their results should be analyzed in conjunction with other feedback sources.
NPS scores can be influenced by key drivers outside a company’s control, such as industry trends or economic conditions. Still, they can be worth it when used appropriately and with other customer feedback sources. They are a valuable tool in boosting revenue growth and preventing customer churn.
What are the three net promoter scores?
There are three net promoter scores (NPS) based on customer responses to the likelihood to recommend questions.
The first score is the percentage of promoters (customers who give a score of 9 or 10) minus the percentage of detractors (customers who give a score of 0-6).
The second score is the percentage of promoters only.
The third score is the percentage of promoters minus the percentage of detractors and passives (customers who give a score of 7 or 8). All three scores help companies understand customer allegiance and advocacy.
What does NPS mean?
NPS stands for Net Promoter Score, a customer loyalty and advocacy metric. It is based on a single question asking consumers how likely they are to recommend a business to others, using a scale from 0-10.
Based on their responses, customers are categorized as promoters, detractors, or passives. The NPS score is calculated by subtracting the percentage of detractors from the percentage of promoters, ranging from -100 to 100.
Higher NPS scores indicate greater satisfaction among customers and is a measure of their loyalty, while lower scores suggest areas for improvement.
What does NPS mean in social media?
Depending on the context, NPS can stand for different things in social media.
It may refer to Net Promoter Score, a metric measuring customer loyalty and advocacy.
However, in some social media contexts, NPS can also stand for “New Post Syndrome,” which refers to the excitement and anticipation of publishing a new post or piece of content. In this context, it is used more informally to describe the emotional response of social media users rather than a quantifiable metric.
What is Satmetrix Systems?
Satmetrix is a customer experience management company that provides software and services to help businesses measure, analyze, and improve client experience. The company is best known for developing the Net Promoter Score (NPS) methodology, widely used by businesses to track customer sentiment and commitment. The company offers a range of customer experience management solutions, including surveys, NPS analysis tools, and consulting services, to help companies drive customer engagement, retention, and revenue growth. The firm was acquired by NICE Ltd in 2018.
Who is classed as a promoter for NPS?
In Net Promoter Score (NPS) surveys, customers who give a rating of 9 or 10 on the likelihood to recommend questions are classified as promoters. Promoters are customers who are highly satisfied with a product or service and are likely to recommend it to others. They can be considered brand advocates who may generate positive word-of-mouth and help attract new customers. Companies often focus on increasing the percentage of promoters to boost customer loyalty and grow their business.
What is a good percentage of promoters in NPS?
A good percentage of promoters in Net Promoter Score (NPS) surveys will depend on the industry and competitive landscape.
Generally, an NPS score of 50 or higher indicates that a business has a strong base of loyal enthusiasts who are likely to recommend it to others. Scores between 0 and 30 are average, while scores below 0 suggest significant issues must be addressed.
It’s important to remember that NPS scores are relative and should be compared to industry benchmarks and competitors.
Why are promoters important in NPS?
The primary reason promoters are important in Net Promoter Score (NPS) is that they are highly satisfied customers likely to recommend a business to others. They can be considered brand advocates who generate positive word-of-mouth, combat negative word-of-mouth, and help attract new customers. Promoters are a valuable asset to a business, as they can help increase customer acquisition and retention, boost revenue, and improve the company’s reputation. By identifying and cultivating a base of promoters, businesses can strengthen their customer relationships and foster long-term loyalty and advocacy. In turn, they are increasing the likelihood of gaining more promoters.
What does NPS mean in surveys?
In surveys, NPS stands for Net Promoter Score, a measure of customer loyalty and advocacy. NPS surveys typically ask customers a single question: “On a scale from 0-10, how likely are you to recommend our product/service to a friend or colleague?” Based on their responses, customers are categorized as promoters (rating of 9-10), passives (rating of 7-8), or detractors (rating of 0-6). The NPS score is calculated by subtracting the percentage of detractors from the percentage of promoters, ranging from -100 to 100. These surveys provide a standardized metric for understanding customer sentiment and identifying areas for improvement.
What are typical questions in a NPS survey?
A typical NPS survey consists of two main questions. The first question asks customers to rate how likely they are to recommend a product or service on a scale of 0 to 10. The second question asks customers to provide an explanation for their rating, either in an open-ended comment box or a follow-up question. Additional questions may also be included to collect demographic information, such as age, gender, and income level, and to gather insights on specific aspects of the customer experience.
What is the 5-point scale for NPS?
The 5-point Net Promoter Score scale is a variation of the standard NPS survey, which uses a 5-point rating scale instead of the traditional 0-10 scale. In this survey, customers are asked to rate the likelihood of recommending a product or service using a 5-point scale ranging from “Very Unlikely” to “Very Likely.” Respondents who select “Very Likely” or “Likely” are considered promoters, those who choose “Neutral” are considered passives or unenthusiastic customers, and those who choose “Unlikely” or “Very Unlikely” are considered detractors. The NPS score is calculated by subtracting the percentage of detractors from that of the promoters, with passives excluded from the NPS calculation.
