What is Net Promoter Score (NPS)

Net Promoter Score, commonly known as NPS, is a customer loyalty metric that gauges the likelihood of a customer recommending a company’s product or service to others. The simplicity of NPS makes it attractive and easily interpretable. It offers businesses a quick snapshot of their customer relationships and loyalty status.

Components of NPS

NPS is based on one simple question:

On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?

The responses to this question are used to classify customers into three categories:

• Promoters (score 9-10)
  Customers who respond with a 9 or 10 are considered Promoters. They are typically loyal, enthusiastic, and likely to continue purchasing and promoting the business through positive word-of-mouth.

• Passives (score 7-8)
  Customers who give scores of 7 or 8 are labeled as Passives. They are generally satisfied but not to the extent that they would actively promote the brand. These customers might be swayed by competitors.

• Detractors (score 0-6)
  Those who respond with a score between 0 and 6 are Detractors. They are likely to be dissatisfied with the company’s product or service and may deter others from patronizing the business through negative feedback.

A GUIDE TO IMPROVING YOUR NET PROMOTER SCORE (NPS)

How NPS is Calculated

Calculating the NPS is straightforward. The formula is:

NPS = % of Promoters - % of Detractors

The percentages are calculated out of the total number of respondents. For example, if you have 100 responses with 70 Promoters, 10 Passives, and 20 Detractors, the NPS would be:

NPS = (70/100) - (20/100) = 0.7 - 0.2 = 0.5 or 50.

NPS scores range from -100 to +100. A positive score indicates that you have more Promoters than Detractors, while a negative score signifies the opposite. A score of +50 and above is generally considered excellent.

Interpretation of NPS

Here’s a general interpretation of NPS:

• -100 to 0
  This range indicates that improvements are needed. There are more Detractors than Promoters.
• 0 to 50
  This suggests that your business is doing well but there is room for improvement.
• 50 to 70
  Your business is performing very well, with many more Promoters than Detractors.
• 70 and above
  This is exceptional, and indicates that your customers are highly satisfied and your business is likely to grow through referrals.