Net promoter score (NPS) measures customers’ loyalty, satisfaction, and willingness to recommend a company’s services or products to others. The NPS scale is from −100 to 100, in which a higher score is desirable. NPS, first developed by Bain and Company in 2003, has become a common feature of customer experience (CX) programs. It has helped businesses measure and track how their brand is perceived by their customers.
In this definition...
How is NPS calculated?
Typically, NPS scores are determined by asking a single question to customers on whether they would recommend the company’s services or products to a friend or colleague. The responders input a rating from 0 to 10.
Responders who give a score of 9 or 10 are considered “promoters” of the company. They are likely to be enthusiastic and loyal customers. Responders who give a score of seven or eight are considered “passive,” which means they are neither happy nor unhappy customers. They will not be included in the NPS calculation. Responders who rate the service 0 to six are “detractors,” which means they are unhappy customers who are unlikely to use the services or buy the products again.
The final score is determined by subtracting the percentage of the sample who are of detractors from the percentage of the sample comprised of promoters.
NPS score example
The Crispy Crunchy Corn Company surveyed 100 customers asking, “On a scale of 0 to 10, how satisfied were you with this bag of Crispy Crunchy Corn™ Nuts?
|Score||# of Responses||Percentage|
So by subtracting the Detractors (10%) from the Promoters (80%), the Crispy Crunchy Corn Company found their Net promoter score is 70.
What is considered a good NPS score?
The creators of NPS, Bain & Company, suggest that an NPS of 0 is good, above 20 is favorable, above 50 is excellent, and above 80 is world-class. A good NPS score can vary from one business to the other; however, a positive NPS score is a good indicator that the business has more happy customers than unhappy customers.
Rather than just looking at the NPS score, companies also like to track the progress of the NPS. If the NPS has shown an upwards trend, that means that the company has been able to improve its customer support.
How can businesses benefit from using NPS?
Businesses can use NPS to measure anything from services, products, web pages, staff members, events, and more. Businesses can also refer to the industry NPS benchmarks to see how they are doing in comparison to others in the industry. This helps businesses better understand their target market, so they can work on improving their offering.
NPS can also be useful in developing effective social media campaigns, as companies can calibrate their marketing according to customer response. It can also be used to evaluate the performance of customer service agents and train customer-facing employees.