NPS (Net Promoter Score) is often held up as the gold standard customer experience metric. First developed in 2003 by Bain and Company, it’s now used by millions of businesses to measure and track how they’re perceived by their customers.

What is NPS and how to measure it? In this article, we will explain all you need to know about NPS.

Net Promoter Score Definition

The Net Promoter Score is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company’s products or services to others. It is used as a proxy for gauging the customer’s overall satisfaction with a company’s product or service and the customer’s loyalty to the brand.

Net Promoter Score (NPS) is one of the simple and effective ways to assess customer satisfaction and an organization’s potential for growth. It consists of just one question:

“On a scale of 0-10, with 10 being the highest, would you like to recommend us to your colleague and friends?”

The benefit of measuring Net Promoter Score

Businesses can use NPS surveys to gain feedback on any aspect of their customers’ experience.

For example, a product team might send out the NPS question immediately after a customer uses the company’s software product for the first time. They might also send it out after the customer has been using the product for 90 days or a year.

Organizations in all types of industries can use NPS scoring to gauge customer satisfaction. Customers might receive the NPS question after shopping at a grocery store, renting a car, or purchasing a product in a shopping mall.

NPS is a core metric for CEM

Use your NPS as the key measure of your customers’ overall perception of your brand.

Why? Because NPS is a leading indicator of growth, it provides the best anchor for your customer experience management (CEM) program.

Complement NPS with other metrics and insights from various points along the customer journey, and you have a comprehensive, actionable view of your customer experience performance.

How to measure NPS

Customers are surveyed on one single question. They are asked to rate on an 11-point scale the likelihood of recommending the company or brand to a friend or colleague.

Then, based on their rating, customers are then classified into 3 categories: detractors, passives, and promoters.

Detractors

Detractors gave a score lower or equal to 6. They are not particularly thrilled by the product or the service. They are most likely won’t purchase again from the company, and also could potentially damage the company’s reputation through negative word of mouth.

Passives

Passives gave a score of 7 or 8. They are somewhat satisfied but could easily switch to a competitor’s offering if given the opportunity. They probably wouldn’t spread any negative word-of-mouth, but are not enthusiastic enough about your products or services to actually promote them.

Promoters

Promoters answered 9 or 10. They love the company’s products and services. They are the repeat buyers, are the enthusiastic evangelist who recommends the company products and services to other potential buyers.

The Net Promoter Score (NPS) is determined by subtracting the percentage of customers who are detractors from the percentage who are promoters. What is generated is a score between -100 and 100 called the Net Promoter Score.

At one end of the spectrum, if when surveyed, all of the customers gave a score lower or equal to 6, this would lead to an NPS of -100. On the other end of the spectrum, if all of the customers were answering the question with a 9 or 10, then the total Net Promoter Score would be 100.

For example, if 10% of respondents are detractors, 20% are passives and 70% are promoters, your NPS score would be 70-10 = 60.

Turning detractors into promoters can impact your NPS and improve loyalty to your brand.

What’s Considered a Good Net Promoter Score?

NPS scores can range from -100 (all detractors and no promoters) to 100 (all promoters and no detractors).

The closer to 100, the better.

Businesses will bring their subjective views to their net promoter scores, and these scores can be open to interpretation. But here is a good rule of thumb:

  • 70 or more: outstanding
  • 50 to 69: strong
  • 49 or less: needs improvement
  • Below 0: red flag!

Transactional vs Relational NPS Survey

There are two methods to do an NPS survey. You can either use a relational NPS survey or a transactional NPS survey.

Relational NPS surveys

Relational NPS surveys are deployed on a regular basis (i.e. quarterly or annually). The goal is to get a periodic pulse on your customers and understand how they feel about your company overall. This data can be used to check the health of customer relationships year-on-year and provide a benchmark for company success.

Transactional NPS surveys

Transactional NPS surveys are sent out after the customer interacts with your company (e.g. during a purchase or support call). They are used to understand customer satisfaction on a granular level and provide feedback about a very specific topic.

But actually, It’s best to use both types to understand your customer at macro and micro levels.

What to do with Your Net Promoter Score?

A high NPS score should be an organization-wide objective, not just a metric the product or customer success team tracks.

If your NPS is lower than you’d like, raising that score should become a strategic priority for your business. To make it a strategic priority, you will want to open communication channels across your organization and set specific, measurable goals for your cross-functional teams.

The aligned goals will ensure everyone knows what is happening with your NPS, recognizes the value of improving it, and understands how they can contribute to that effort.