Net Promoter Score (NPS) is a customer loyalty metric that measures how likely a customer is to recommend a product, service, or company to others. It is based on a single, direct question: "On a scale of 0 to 10, how likely are you to recommend [Company/Product/Service] to a friend or colleague?"
Based on their response, customers are categorized into three groups:
The power of NPS lies in its simplicity. It's easy for customers to answer and for businesses to track, making it a highly effective tool for gathering consistent feedback.
Calculating your NPS is a two-step process. First, you gather responses to the core question. Then, you apply a simple formula.
NPS = Percentage of Promoters - Percentage of Detractors
Let's walk through an example. Suppose you surveyed 200 customers:
First, calculate the percentage of each group:
Now, apply the NPS formula:
NPS = 60% - 15% = 45
Your Net Promoter Score would be 45. Note that the percentage of Passives is not used in the final calculation, and the score is always expressed as a whole number, not a percentage. Scores can range from -100 (if every customer is a Detractor) to +100 (if every customer is a Promoter).
An NPS score above 0 is generally considered good, as it means you have more Promoters than Detractors.
However, context is critical. NPS benchmarks vary widely by industry. For example, the airline industry may have lower average scores than the tech industry. It's most valuable to track your own NPS over time and benchmark against your direct competitors.
NPS is more than just a metric; it's a system for driving organizational improvement and growth.
Customer loyalty is directly linked to business growth. Promoters are more likely to make repeat purchases, spend more over time, and refer new customers. Detractors, on the other hand, can actively stunt growth. By tracking NPS, you get a leading indicator of your company's future revenue and market share. Companies like Apple and Amazon are known for their high NPS scores, which correlate with their sustained growth.
The NPS survey shouldn't end with the numerical question. The most valuable insights come from a follow-up, open-ended question like, "What is the primary reason for your score?" This qualitative feedback explains the "why" behind the number. Analyzing these responses helps you identify specific strengths to double down on and weaknesses to address.
The simplicity of NPS is one of its greatest strengths. It's easy for customers to answer, which leads to higher response rates. Internally, it's a single, easy-to-understand metric that can be shared across all departments, from the C-suite to the front lines. This creates a common language for discussing customer loyalty.
NPS provides a standardized metric that allows you to benchmark your performance over time and against competitors. Seeing your score rise or fall after implementing changes helps you understand what's working. Knowing how you stack up against the competition can motivate your team and highlight market opportunities.
A low or stagnant NPS is a call to action. Here are practical strategies to turn Detractors and Passives into loyal Promoters.
The most important step after collecting NPS feedback is to act on it. "Closing the loop" means following up with customers who have provided feedback.
Your goldmine of information is in the open-ended feedback. Use text analysis tools or manual review to identify recurring themes. Are Detractors consistently complaining about slow shipping? Are Promoters always praising a specific customer service agent? These patterns point directly to the operational changes that will have the biggest impact on customer loyalty.
Your customer-facing teams are your NPS champions. They are the ones who create the experiences that shape customer perceptions.
To make lasting improvements, NPS needs to be more than a marketing metric—it needs to be a core part of your company's DNA.
NPS can be measured at different touchpoints to pinpoint specific areas for improvement.
For example, a customer might have a high overall (relational) NPS for your brand but provide a low (transactional) NPS after a frustrating support experience. This helps you isolate and fix the problem without misinterpreting their overall loyalty.
Net Promoter Score is a powerful tool, but its true value is unlocked when you use it as a catalyst for change. It's not about chasing a high score for its own sake; it's about listening to your customers and systematically improving their experience.
Start by implementing a simple NPS survey. Ask the "why," close the loop with your customers, and share the insights across your organization. By building a culture that is genuinely focused on creating more Promoters, you'll not only improve your score but also build a more resilient and profitable business fueled by customer loyalty.