Net Promoter Score

What is Net Promoter Score (NPS®)? Definition, Formula, Calculation, Applications and Advantages

Afsheen Khan
Aug 21, 2019

6 mins read

Afsheen Khan

What is Net Promoter Score® (NPS)?

Net Promoter Score (NPS) is defined as a metric for determining the state of a customer’s loyalty and satisfaction with a brand or product.

NPS is typically measured using the NPS survey question which asks the respondent the following question (or a slightly altered version of the same question without changing its meaning):

Considering your complete experience with us, how likely are you to recommend us to a family or friend?

[Answer option scale from 0-10]

Classification of customers based on NPS survey response:

The data pulled from this response is an indicator of their brand loyalty and satisfaction. A customer is then classified in either of the 4 buckets, depending on response selection:
Detractor (Responses from 0-6): A customer is marked as a detractor if their response is within the range of 0-6. A brand detractor essentially means that the customer is likely to detract from your brand to a competitor to meet their product/service needs.

Once a customer has been identified as a detractor, it is highly advisable to connect with the client immediately for damage control and prevention of loss of the client.

The net promoter score is, therefore, more than just an identifier of brand promoters, but also an identifier of detractors, such that you might still have enough window to prevent revenue loss.

This is one of the core reasons to conduct periodic NPS surveys to understand the state of your clients with a simple, quick, easy to answer a question.

net promoter score

Passive (Responses from 7-8): Passive customers are those who are essentially satisfied with your brand/product enough to continue for the time being, however, they are not satisfied enough to recommend your brand.

So, while passive customers are not your immediate and critical concern in comparison to potential detractors, however, they are low hanging fruits that can be converted to promoters more easily by your customer success teams.

In other words, prevent detractors from leaving by at least converting them to passive on priority. Once that is done, focus on converting passive responders to brand promoters.

Promoter (Responses from 9-10): Promoters are the cream of an organization – the customers who are not just satisfied with your product/service, but are also ready to actively recommend them to their network.

Brand promoters are often the customers who determine whether a company stays in business in future or not. Especially if you are a new entry in the market, you have to depend on recurring renewals from customers and new leads for your sales team from recommendations.

It is therefore critical to have action items for your promoters to nudge them to amplify your brand without being too pushy. For instance, a simple hack is -when you identify a promoter through an online net promoter score survey, immediately after the response is registered between 9-10, you can display a follow-up screen requesting the customer to share their response on social media. Its an example of simple, honest and transparent ways to nudge your customers into becoming brand advocates using the latest tech.

How is Net Promoter Score (NPS) calculated?

Net promoter score is calculated using this simple formula:

NPS = Percentage of promoters – Percentage of detractors

Before we jump into examples, here are 5 key features to keep in mind while calculating your Net Promoter Score:

  1. NPS is a percentage, hence the percentage sign is not included in the final score.
  2. Your final NPS will be between a range of positive % and negative % falling between -100 to + 100.
  3. A negative NPS indicates net more detractors than promoters.
  4. A positive NPS indicates net more promoters than detractors.
  5. NPS will be zero when there is an equal number of promoters and detractors.

Let’s take a quick example for NPS calculation and how the score value changes and what it means :

Say, you own a company which has 100 customers you want to survey for NPS.

Let’s say the responses came out with the following distribution:

Promoters – 30%, Passive – 40%, Detractors – 30%.

Here, you have a net 0 promoter score. Because your promoters and detractors canceled each other out.

Let’s take another set of score:

Promoters – 50% Passive – 20%, Detractors – 30%

Here, 50%-30% = 20%. So your NPS score is +20.

Let’s take a final set of score:

Promoters – 30% Passive – 20% Detractors – 50%

Here, 30% – 50% = – 20%. So your NPS score here will be –20.

Strategic business applications of Net Promoter Score (NPS)

Net Promoter Score can be strategically implemented across your organization to measure success or failure at various levels:

  • Geo-location based NPS: You can conduct an NPS survey to identify the best performers among your customer-facing teams catering to various geo-locations. Let’s say you have a customer success team for Europe, one for North America and one for South America. If you want to know which of your teams are delivering best in customer satisfaction – just conducting a geo-location-based customer NPS survey will tell most of the story.
  • Kiosk-based NPS: If you own a store or outlet that has a physical location for customers to walk-in and out, this is the best place to implement a kiosk-based NPS using a tablet screen. Here, customers walking out of the store can give an NPS based on their latest experience with the brand and can provide immediate feedback. A single NPS question is a much better alternative to get customer satisfaction indicator, than asking customers multiple survey questions to get the same derivative indicator.
  • Website/App NPS: In the present era, customers spend most to their time online using websites and mobile apps. This is where they engage with brands and form opinions about a product by reading reviews. One of the creative ways to deploy an NPS survey on your website and mobile app and configure them to trigger the survey based on buyer journey or action. For instance, after cart checkout for eCommerce sites, page exit action (a survey pops up when user actions to exit a product page), etc. These are strategic locations to be selected based on business priorities, site structure and user behavior on your website or app.

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