Understanding NPS: Net Promoter Score Explained (2024)

What is a net promoter score?

The Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction. It was developed by Fred Reichheld, Bain & Company, and Satmetrix in 2003. NPS is based on the fundamental perspective that every company’s customers can be divided into three categories: Promoters, Passives, and Detractors.

Benefits of measuring NPS

Measuring NPS can provide valuable insights into customer loyalty and satisfaction, which can in turn help businesses identify areas for improvement and growth. It can also help in predicting customer behavior and future growth potential. Additionally, NPS can serve as a benchmark for comparing performance against competitors.

Limitations of measuring NPS

While NPS can provide valuable insights, it does have limitations. For example, it may not provide a complete picture of customer satisfaction, as it only focuses on the likelihood of customers to recommend a company. Additionally, it may not capture the reasons behind the score given by customers.

5 things NPS can tell you about your business

1. What consumers think of your company

NPS can provide insights into how consumers perceive your company as a whole, which can help in understanding overall brand sentiment.

2. What consumers think of individual products, services, or departments

NPS can also help in understanding how consumers perceive specific offerings or departments within your company.

3. What your employees think of your company

By measuring NPS internally, businesses can also gain insights into employee satisfaction and loyalty, which can impact customer experience.

4. How you perform against various competitors

Comparing NPS with competitors can help in understanding where your company stands in terms of customer loyalty and satisfaction.

5. How customer perception changes over time

NPS can also track changes in customer sentiment over time, helping in understanding the impact of business decisions and initiatives.

How to calculate NPS

The NPS is calculated by asking customers a single question: “How likely is it that you would recommend our company/product/service to a friend or colleague?” The respondents are then classified into Promoters, Passives, or Detractors based on their score.

5 tips for building a good NPS survey

1. Gather objective data

Ensure that the survey questions are clear and unbiased to gather accurate data.

2. Solicit customer feedback

Include open-ended questions to gather qualitative feedback in addition to the NPS score.

3. Consider your sample size

Ensure that the sample size is statistically significant for accurate results.

4. Consider your sample set

Ensure that the survey is sent to a representative sample of your customer base to avoid bias.

5. Send strategically

Send the survey at an appropriate time, such as after a purchase or customer interaction, to capture relevant feedback.

What is a net promoter score (NPS) FAQ

What industries typically have high net promoter scores (NPS)?

Industries such as technology, hospitality, and retail tend to have higher NPS scores due to the nature of their offerings and customer interactions.

How often should NPS be measured?

NPS should be measured regularly to track changes in customer sentiment and loyalty. The frequency can vary based on the industry and business dynamics.

Can a NPS be negative?

Yes, NPS can be negative if there are a higher number of detractors than promoters in the survey responses.

How many customers should be surveyed to get an accurate NPS?

The number of customers surveyed should be statistically significant and representative of the customer base to ensure accurate results.