Net Promoter Score (NPS)

Net Promoter Score (NPS) is a customer loyalty metric that measures the likelihood of customers recommending a company’s products or services to others. It provides valuable insights into customer satisfaction and helps businesses identify areas for improvement to boost overall customer experience.

Have you heard of “Net Promoter Score” or NPS but aren’t sure what it means? NPS is a popular way for businesses to measure how happy and loyal their customers are. This guide will explain NPS in simple terms, showing you what it is, how it works, and why it matters. By the end, you’ll know how to use NPS to make your customers’ experience better.

What is Net Promoter Score?

Net Promoter Score (NPS) is a simple tool that helps businesses see how loyal their customers are. It’s based on one question: “How likely are you to recommend us to a friend on a scale of 0 to 10?” This score shows how customers feel and if they’d speak positively about your brand, making it a great way to measure customer loyalty.

How Does Net Promoter Score Work?

NPS works by categorising customers into three groups based on their responses to the 0-10 scale question:

1. Promoters (Score 9-10): These are your most loyal customers. They are enthusiastic about your brand and are likely to refer others to your business. Promoters are valuable because they can drive positive word-of-mouth, which is one of the most powerful marketing tools.

2. Passives (Score 7-8): These customers are satisfied but not enthusiastic enough to be considered promoters. They might be content with your service, but they’re also open to switching to a competitor if they find something better. While passives aren’t actively promoting your brand, they aren’t harming it either.

3. Detractors (Score 0-6): Detractors are unhappy customers who are unlikely to recommend your business. Worse, they may actively discourage others from using your products or services. Detractors can negatively impact your brand through negative word-of-mouth, which is why it’s crucial to address their concerns.

How to Calculate Net Promoter Score

The calculation of NPS is straightforward. You simply subtract the percentage of Detractors from the percentage of Promoters:

NPS = % of Promoters - % of Detractors

For example, if 50% of respondents are Promoters, 30% are Passives, and 20% are Detractors, your NPS would be:

NPS = 50% - 20% = 30

This means your Net Promoter Score is 30, which is generally considered a good score. An NPS can range from -100 (if all respondents are Detractors) to +100 (if all respondents are Promoters).

What is a Good Net Promoter Score?

A good NPS can vary depending on the industry, but as a general rule:

• Above 0: A positive score means you have more Promoters than Detractors, which is a good sign.

• Above 30: This is considered a strong score and indicates that you have a solid base of loyal customers.

• Above 70: An exceptional score, often seen in industries where customer loyalty is highly valued, such as luxury goods or technology.

Net Promoter Score Calculation: 10-Point vs. 5-Point Scale

The most popular way to calculate NPS is using a 10-point scale, as described above. However, some businesses use a 5-point scale, particularly in markets where customers are more accustomed to simpler surveys.

Why There is a 5- and 10-Point Scale for NPS

The Net Promoter Score (NPS) is a popular metric used by businesses to measure customer loyalty. It typically uses a 10-point scale, where respondents rate their likelihood to recommend a company on a scale from 0 to 10. However, some organisations prefer a 5-point scale for simplicity. The primary reason for these two scales is to balance ease of use with the depth of insight. A 10-point scale provides more granularity, offering nuanced data that can help identify small shifts in customer sentiment. Conversely, a 5-point scale simplifies the process for respondents, which can lead to higher response rates and a more straightforward analysis.

How to Calculate NPS on a 10-Point Scale:

Ask your customers: “On a scale of 0-10, how likely are you to recommend us to a friend or colleague?”

Categorise the responses:

Promoters: 9-10
Passives: 7-8
Detractors: 0-6

Calculate the NPS by subtracting the percentage of Detractors from the percentage of Promoters.

Benefits and Drawbacks of a 10-Point Scale

The 10-point scale is the standard for NPS because it allows for a more detailed understanding of customer loyalty. The larger range of options helps differentiate between varying degrees of satisfaction or dissatisfaction, providing richer data for analysis. This granularity can be especially useful for identifying trends over time or across different customer segments. However, the downside is that some respondents may find it overwhelming or confusing, which could result in inconsistent or less reliable data. Additionally, it can be more challenging to communicate results to stakeholders who prefer simplicity.

net promoter score calculation 5 point scale:

Ask your customers: “On a scale of 1-5, how likely are you to recommend us to a friend or colleague?”

Categorise the responses:

Promoters: 5
Passives: 4
Detractors: 1-3

How to calculate net promoter score calculation 5 point scale:

Calculate the NPS using the same formula: % of Promoters - % of Detractors.

Benefits and Drawbacks of a 5-Point Scale

A 5-point scale simplifies the rating process for respondents, making it easier and quicker to complete, which can improve response rates. This simplicity also makes it easier to explain and interpret the results, which is beneficial when communicating with stakeholders. However, the 5-point scale’s lack of granularity can lead to a loss of detailed insights, as it compresses the range of possible responses. This could make it harder to detect subtle shifts in customer sentiment, potentially limiting the effectiveness of the data in driving meaningful change.

Definitions and Behaviours of Detractors, Promoters, and Passives

Detractors:

Definition: Detractors are customers who rate their likelihood of recommending your company, product, or service between 0 and 6 on the Net Promoter Score (NPS) scale. They are generally dissatisfied or unhappy with their experience and are at risk of spreading negative word-of-mouth.

Behaviours:

Negative Word-of-Mouth: Detractors are likely to share their negative experiences with others, potentially harming your brand’s reputation.
Complaints and Criticism: They may frequently contact customer service with complaints or post critical reviews online.
Low Loyalty: Detractors are more likely to switch to a competitor and less likely to return for future purchases.
Reluctance to Engage: They may avoid engaging with marketing campaigns or offers and might unsubscribe from newsletters or communications.

Promoters:

Definition: Promoters are customers who rate their likelihood of recommending your company, product, or service as 9 or 10 on the NPS scale. They are highly satisfied and loyal customers who are enthusiastic about your brand.

Behaviours:

Positive Word-of-Mouth: Promoters are likely to recommend your products or services to friends, family, and colleagues, contributing to new customer acquisition.
Brand Advocacy: They may actively defend your brand in conversations or online forums, and share their positive experiences on social media or review sites.
Repeat Purchases: Promoters are more likely to make repeat purchases and try new products or services you offer.
Higher Engagement: They tend to engage with your marketing campaigns, participate in loyalty programs, and provide valuable feedback.

Passives:

Definition: Passives are customers who rate their likelihood of recommending your company, product, or service as 7 or 8 on the NPS scale. They are generally satisfied but not enthusiastic enough to be considered promoters. They are vulnerable to competitive offers.

Behaviours:

Neutral Word-of-Mouth: Passives may not actively recommend your brand, but they also aren’t likely to spread negative feedback.
Moderate Loyalty: While they are satisfied with your products or services, they are open to trying out competitors if they find a better offer or experience.
Occasional Engagement: Passives might engage with your brand sporadically, such as responding to surveys or participating in promotions, but they are less involved than promoters.
Potential for Conversion: With the right incentives or improvements, passives can be converted into promoters by addressing their concerns and enhancing their experience.

Understanding these categories helps businesses tailor their customer experience strategies to address the concerns of Detractors, retain and convert Passives, and nurture Promoters to foster loyalty and advocacy.

What is a Good NPS Score?

A good NPS score is relative to your industry and your company’s goals. Generally, an NPS score above 0 is considered positive, as it indicates that you have more promoters than detractors. Scores above 50 are seen as excellent, while anything above 70 is exceptional.

How to Use NPS in Your Business

Once you have your NPS score, what should you do with it? Here are some practical steps:

Analyse Feedback: Don’t just look at the numbers—dig into the feedback that customers provide along with their scores. This will help you understand why customers are promoters, passives, or detractors.
Take Action: Use the feedback to make improvements in your products, services, or customer experience. This could mean addressing specific complaints from detractors or finding ways to turn passives into promoters.
Follow Up: Show your customers that you value their feedback by following up with them. Let them know what changes you’ve made based on their input.
Track Over Time: NPS isn’t a one-time measurement. Track it over time to see how your changes are impacting customer loyalty and satisfaction.

In addition to measuring customer loyalty, NPS can also be applied internally to gauge employee satisfaction. The Employee Net Promoter Score (eNPS) works in much the same way as NPS, but it asks employees how likely they are to recommend the company as a place to work.
This can be a powerful tool for understanding the employee experience and identifying areas where improvements can be made to increase employee engagement and satisfaction.

Net Promoter Score Software

There are several software tools available that can help you calculate, track, and analyse your NPS. These tools often include features like survey creation, automated feedback collection, and detailed analytics.

Some popular NPS software options include:

• SurveyMonkey: A versatile survey tool that allows you to create and distribute NPS surveys easily.

• Zendesk: Known for its customer service capabilities, Zendesk also offers NPS tracking as part of its suite.

• Hotjar: Primarily a user experience tool, Hotjar includes NPS surveys to help you gauge customer loyalty.

Strategy for Turning Detractors into Promoters

Converting detractors into promoters is a powerful strategy for enhancing your business’s Net Promoter Score (NPS) and overall customer satisfaction. While detractors may pose a challenge, they also present a significant opportunity for growth. By addressing their concerns and improving their experience, you can reduce negative word-of-mouth and potentially transform these dissatisfied customers into passionate advocates for your brand.

The process of turning detractors into promoters involves understanding their frustrations, delivering exceptional customer service, and implementing targeted strategies to address their specific needs.

Tips to turn detractors into promoters:

• Actively Listen to Feedback:

• Start by carefully analysing the feedback provided by detractors. Understand the root causes of their dissatisfaction, whether it’s related to product quality, service, pricing, or another aspect of their experience.

• Respond Promptly and Personally:

• Speed and personalisation are crucial when dealing with detractors. Reach out swiftly with a tailored response that acknowledges their concerns and outlines the steps you’re taking to resolve the issue.

• Resolve Issues Effectively:

• Ensure that any problems raised by detractors are resolved comprehensively. Go above and beyond to exceed their expectations and demonstrate that you value their business.

• Follow Up After Resolution:

• After resolving the issue, follow up to ensure that the customer is satisfied with the outcome. This step shows your commitment to their experience and allows you to address any lingering concerns.

• Offer Incentives for Future Engagement:

• Encourage detractors to give your business another chance by offering incentives, such as discounts, free services, or loyalty points. This can help rebuild trust and encourage future purchases.

• Implement Feedback for Continuous Improvement:

• Use the insights gained from detractor feedback to make long-term improvements to your products, services, or processes. When customers see that their feedback has led to tangible changes, they are more likely to become promoters.

• Communicate Improvements:

• Let detractors know about the changes you’ve made as a result of their feedback. Highlighting your responsiveness can enhance their perception of your brand and increase their likelihood of becoming promoters.

• Build a Customer Success Team:

• Consider establishing a dedicated team focused on managing relationships with detractors. This team can provide proactive support, monitor progress, and ensure that detractors’ issues are resolved effectively.

• Create a Positive Emotional Connection:

• Build an emotional connection with detractors by demonstrating empathy, understanding, and a genuine commitment to their satisfaction. This can turn a negative experience into a positive one.

• Track Progress and Adjust Strategies:

• Continuously monitor the impact of your efforts to convert detractors into promoters. Track changes in their behaviour and adjust your strategies as needed to ensure ongoing success.

By implementing these strategies, you can turn dissatisfied customers into loyal advocates, improving your NPS and driving long-term business success.

Engaging and Leveraging Promoters

Promoters are your brand’s most loyal customers, and they can be a powerful asset in driving growth and enhancing your reputation. Since these customers are highly satisfied with your products or services and are likely to recommend your business to others, it’s essential to engage with them strategically to maximise their positive impact.

11 Ways you can make the most of your promoters in 2024:

Acknowledge and Thank Them:
Start by expressing your appreciation for their loyalty. A simple thank you message or personalised note can go a long way in reinforcing their positive feelings towards your brand.
Request Testimonials and Reviews:
Encourage promoters to share their positive experiences by leaving reviews or providing testimonials. These can be featured on your website, social media, and marketing materials to attract new customers.
Involve Them in Referral Programmes:
Create referral programmes that incentivise promoters to bring in new customers. Offer rewards such as discounts, freebies, or exclusive access to new products or services in return for successful referrals.
Engage Them in Brand Advocacy:
Invite promoters to become brand advocates by participating in case studies, interviews, or guest blog posts. Their stories can be powerful tools in building trust with potential customers.
Offer Exclusive Access or Rewards:
Provide promoters with exclusive offers, early access to new products, or invitations to special events. This makes them feel valued and gives them more reasons to remain loyal to your brand.
Gather Feedback for Innovation:
Involve promoters in product development or service improvement initiatives by soliciting their feedback. They can offer valuable insights that help you innovate and refine your offerings.
Encourage Social Sharing:
Encourage promoters to share their positive experiences on social media. You can create shareable content, such as branded hashtags or user-generated content campaigns, that makes it easy for them to spread the word.
Create a Loyalty Programme:
Implement a loyalty programme that rewards promoters for repeat purchases and engagement. Points-based systems, tiered rewards, or special recognition can further cement their loyalty.
Invite Them to Beta Testing:
Give promoters the opportunity to test new products or services before they launch. This makes them feel like insiders and allows you to gather valuable feedback from your most loyal customers.
Personalise Their Experience:
Use data-driven insights to personalise the experiences of your promoters. Tailored recommendations, personalised communications, and bespoke offers can deepen their connection to your brand.
Turn Them into Mentors:
Consider involving promoters in mentoring other customers, especially if you have a community or forum. They can help answer questions, offer advice, and share their experiences with others, enhancing the overall customer experience.

By actively engaging with your promoters and involving them in various aspects of your business, you can turn their loyalty into tangible benefits. Not only will they continue to advocate for your brand, but their positive influence can also attract new customers, increase customer retention, and drive long-term business success.

Takeaway Points for Understanding and Implementing Net Promoter Score (NPS)

NPS is a Direct Measure of Customer Loyalty:
Net Promoter Score is a straightforward and effective way to gauge how likely your customers are to recommend your business. This is not just a measure of satisfaction but an indicator of their loyalty and how they perceive your brand.
Simple Calculation with Powerful Insights:
The NPS formula—subtracting the percentage of Detractors from the percentage of Promoters—gives you a clear, actionable score that reflects your overall customer sentiment. A positive score suggests that your business is doing well, while a negative score indicates areas needing improvement.
Understand the Categories:
Customers are divided into three categories: Promoters, Passives, and Detractors. Each group offers unique insights. Promoters are your brand advocates, Passives are satisfied but could be swayed by competitors, and Detractors are at risk of spreading negative word-of-mouth.
NPS is Flexible:
While the 10-point scale is most common, the NPS can also be adapted to a 5-point scale. Both scales serve the same purpose but are used depending on customer preference or industry standards.
A Good NPS Varies by Industry:
What constitutes a “good” NPS can differ by industry. However, in general, a score above 30 is strong, while a score above 70 is exceptional. Regular benchmarking against industry standards is essential for context.
Continuous Monitoring is Key:
NPS is not a one-off measurement. It should be tracked over time to monitor trends, measure the impact of changes, and continually improve customer experience. This ongoing process helps businesses stay aligned with customer expectations.
NPS Feedback is a Goldmine for Improvements:
Beyond the score, the qualitative feedback accompanying NPS responses is invaluable. This feedback can guide actionable changes in products, services, and customer interactions, directly addressing the needs and concerns of your customers.
Employee NPS (eNPS) Offers Internal Insights:
Applying NPS internally as eNPS helps gauge employee satisfaction and loyalty. Happy, engaged employees often translate to better customer experiences, making eNPS a critical tool for overall business health.
Leveraging NPS Software:
There are several tools available that simplify the process of conducting NPS surveys and analysing the results. These tools can automate survey distribution, collect feedback, and provide in-depth analytics, saving time and ensuring consistency.
Tailor Your Approach Based on NPS Findings:
The insights gained from NPS should lead to tailored strategies for different customer groups. For example, focus on converting Passives to Promoters through targeted engagement and addressing the concerns of Detractors to reduce churn.
Integrate NPS into Your Overall CX Strategy:
NPS should not be viewed in isolation but integrated into your broader customer experience (CX) strategy. It complements other metrics and feedback systems to provide a holistic view of customer satisfaction and loyalty.
Engage Customers Post-NPS Survey:
Following up with respondents, especially Detractors, shows that you value their feedback and are committed to improvement. This can turn a negative experience into a positive one and build stronger customer relationships.
Benchmark Against Competitors:
Use your NPS to benchmark against competitors. This can provide insights into where you stand in the market and what improvements can help you gain a competitive edge.
NPS as a Predictor of Business Growth:
A high NPS is often correlated with business growth, as Promoters are more likely to recommend your business, leading to new customers. Use NPS as an indicator of future success and a tool to drive growth strategies.
Actively Involve Your Team:
Share NPS results with your team and involve them in discussions about how to improve. When employees understand the impact of NPS, they are more likely to contribute to enhancing customer experience.

By implementing and continuously refining your use of NPS, you can not only measure but also significantly improve customer loyalty, satisfaction, and overall business performance.

Net Promoter Score (NPS) is far more than just a number; it’s a critical tool for understanding the depth of your customer relationships and a clear indicator of where your business stands in terms of customer loyalty. In today’s competitive landscape, knowing how your customers perceive your brand is invaluable. NPS offers a straightforward, yet profoundly impactful, way to measure this by categorising your customers into Promoters, Passives, and Detractors. This categorisation provides insights into how well your business is performing in the eyes of those who matter most—your customers.

But NPS isn’t just about the score; it’s about the journey of continuous improvement. The true value of NPS lies in the actions you take after gathering the data. By analysing the feedback from your NPS surveys, you can identify what’s working well and what needs attention. This process enables you to make informed, customer-driven decisions that enhance your products, services, and overall customer experience. The beauty of NPS is its simplicity combined with its ability to drive meaningful change.

Implementing NPS effectively requires more than just understanding the basics. It’s about integrating it into your wider customer experience strategy and using it as a benchmark for success. Whether you choose to use the standard 10-point scale or adapt to a 5-point scale, the insights gained are invaluable. Regular monitoring and tracking of your NPS over time will help you identify trends, measure the impact of improvements, and stay aligned with your customers’ expectations. This continuous loop of feedback and action is what drives long-term customer loyalty and business growth.

Moreover, expanding the use of NPS internally with Employee Net Promoter Score (eNPS) can provide insights into your employee satisfaction, which is closely linked to customer satisfaction. A motivated and engaged team is more likely to deliver exceptional service, which directly influences your NPS. Therefore, NPS serves as a holistic tool, not just for customer experience but for overall business health.

In an era where customer experience is a key differentiator, NPS is a powerful metric that should be at the heart of your customer strategy. It’s a tool that allows you to listen to your customers, act on their feedback, and build a loyal customer base that drives your business forward. By embracing NPS, you’re not just measuring customer satisfaction—you’re actively shaping it. Every interaction, every piece of feedback, and every response is an opportunity to strengthen your customer relationships and ensure your business remains competitive.

As you continue on your customer experience journey, remember that NPS is a dynamic metric. It’s not a one-time effort but a continuous process of listening, learning, and improving. The insights you gain from NPS can guide your strategies, influence your decisions, and ultimately lead to a more successful and customer-centric business. So, take the time to understand your NPS, act on the feedback, and watch as your business grows stronger, more resilient, and more in tune with your customers’ needs.