The Ultimate Guide To Net Promoter Score® (NPS)

Ultimate guide to NPS

Ever wondered about NPS, or Net Promoter Score®? Well then, look no further. NPS is probably the most important customer satisfaction and customer loyalty metric to track. It gives you a high-level aggregate score of whether your customers will help grow your business or shrink it. We love NPS for so many reasons but not least because of its simplicity and elegance.

In this ultimate guide, we’ll explain everything you need to know about NPS, including what it’s for, how to measure NPS, how to calculate NPS, the best NPS questions to ask, how to track NPS, NPS benchmarks, NPS analysis and how to improve your NPS score. We also have a library of NPS resources. 

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What is NPS?

NPS is the abbreviation for ‘Net Promoter Score®’. It’s designed to measure the overall loyalty your customer has to your brand. In other words, a customer loyalty metric. Businesses around the world use NPS. It’s based on the net promoter system which is essentially asking as many customers as possible the exact same question:

On a scale of 0-10, how likely are you to recommend X (to a friend or colleague)?

Responses to this question – or variations of it – are used to formulate a single running score. This score evolves each time a new response is received.

nps survey example

Who should be using NPS?

Organizations in all sectors and in all sizes. That‘s because NPS is applicable to any organization. At least two-thirds of the Fortune 1000 use NPS, but its reach extends deep into far smaller businesses too. IBM’s executive in charge of NPS says, “It’s more than a metric. One could use the word ‘religion.’”

NPS is a measure of peer promotion and therefore loyalty. It shows how much a certain brand or organization might be recommended to others. Therefore the organization in question doesn’t even have to have customers to qualify. For example, it’s an equally valid measure for how likely employees are to recommend employment at a company to friends and colleagues. Or to government organizations, for whom their ‘customers’ have no power of choice, using NPS as a measure of customer satisfaction.

Why is measuring my NPS score so important

net promoter score nps customer thermometer reporting

NPS is well established

NPS stands out as a highly popular and mature KPI that all stakeholders understand. This makes it simpler for customer experience professionals to get mindshare from senior business leaders. Choosing to measure NPS means following a well-trodden path and a host of established NPS strategies.

NPS is commercially significant

NPS has a unique capacity to go beyond simply how satisfied or positive customers are. By measuring the likelihood of repeat business, NPS is commercially influential. Boards may pay more attention to the prospect of increased revenue than abstract notions of ‘making customers happy.’

NPS can zoom in or out on customer loyalty

NPS has a very wide lens. You can use it to get a picture of customer loyalty for an entire organization. This is what NPS is most commonly used for – as a high-level KPI that covers everything.

But NPS can be used more dynamically and with greater precision. For example, by enquiring after the likelihood of recommendation for a special product or service. This can be even more beneficial to an organization. Imagine a hotel chain with 200 properties, tracking NPS for each one. The best can count on the highest loyalty and referral business. That’s valuable data. The chain could use it to target improvements at the hotels with the lowest NPS scores.

NPS is fast, simple and inexpensive to measure

As far as customer feedback and market research goes, it doesn’t get much simpler than NPS surveys. Pre-qualification of survey recipients is very easy – they just need to be customers. Being based around a single question makes surveys very small. This places almost no burden on customers, encouraging them to respond in larger numbers. This in turn makes results more representative and reliable. They are also faster to complete, giving you more up-to-the-minute information. And because it’s the same constant question, the results are highly reliable over time.

NPS is the catalyst for deeper insights

NPS surveys give you a single point-in-time measurement with individual customers. But when you aggregate data from many customers, and track this over time, you get deeply meaningful insights. Strictly speaking, NPS is really just about that single question – but there’s no stopping you asking follow ups. In fact, it should be considered best practice. If someone indicates a high or low likelihood to recommend, shouldn’t you ask why? The results should be instructive and used to feed into a range of operational and product/service changes.

NPS is easily comparable

The primary purpose of NPS is to provide a reliable measurement to base future plans from. It’s your insight, designed to benefit your organization. Organizations measuring NPS for the first time will use their initial measurement as a benchmark for future comparison. The great thing about NPS is that you can also benchmark against other organizations. For example, competitors in your industry or just renowned leaders in great customer experience. Many organizations publish their NPS scores. Should you publicise your NPS score?

Bear in mind that anyone can ask your customers for an NPS score relating to your organization. If you’re a large business, you could have an NPS score even though you didn’t generate it!

How do I calculate NPS?

The first step is to set up an NPS survey. The second part is measuring NPS is by accumulating the responses to the NPS question from multiple customers. These will be in numeric form i.e. each response will have selected a number between 0 and 10.

Each response in the NPS scale allows it to be categorized into one of 3 groups:

  • Promoters: those with responses of 9 or 10
  • Passives: those with responses of 7 or 8
  • Detractors: all other responses (i.e. from 0–6)net promoter score survey calculation ct

Complete this step with all NPS responses received. From this point onwards, the number selection of each respondent is irrelevant. All that matters is which category each response qualifies for.

  • Promoters: considered to be likely advocates for your business; loyal and predisposed to recommend and give positive word of mouth.
  • Passives: considered to be benign; certainly no threat to negativity but unlikely to be moved to proactivity and not especially loyal. 
  • Detractors: the opposite of promoters; potentially harmful in their capacity to share negative experiences to others and more likely to be disloyal than loyal.

The next step is to calculate the proportions that your response group divides into. Record each proportion as a percentage. Each of the three percentage figures should add up to 100%.

For example:

  • Promoters = 40%
  • Passives = 50%
  • Detractors = 10%

Because ‘passives’ are neutral, don’t include them in the last part of the calculation. You simply subtract the percentage of detractors from the percentage of promoters. The result is expressed as a number (so drop the percentage sign).

  • 40% – 10% = 30 

This figure of 30 is a positive number so would commonly be expressed as “+30”. This distinguishes it more visibly from negative NPS ratings for comparison purposes. 

All NPS scores will result in a range between –100 and +100. Here, –100 would be the product of every single NPS customer response being a detractor. A score of 100+ would be the product of every single NPS customer response being a promoter. 

What is a good NPS score?

positive Net Promoter Score nps example

What makes a good NPS score varies enormously from industry to industry, but generally speaking any NPS score above a 0 shows that more people would recommend you than not. Understanding industry NPS benchmarks is a key factor in long-term success.

Getting a baseline to work from is what matters. No matter how well or badly you think you’re doing with customer loyalty and satisfaction, the critical part is to start measuring it, and then start doing things to improve across the board based on the feedback you get.

What is a bad NPS score?

bad net promoter score nps score

NPS scores can range enormously across companies, markets and industries and so what counts as a “bad” score for your specific situation will be influenced by these things. However, any score that is negative shows you that most of the people rating you are actively detractors – ie they are saying negative things about you to others in their networks. 

You can quickly start to turn this situation around though. Find out why customers are giving you negative scores using an NPS measurement system. Is it your product, service, location, or an attitude that’s causing issues? You can get verbatim comments as well as asking customers to pick from a range of options, or drivers, as to why they scored you a certain way, and then start to fix it.

How do I improve my NPS score?

Net Promoter score response planner

Our NPS best-practice response planner will help you do this, click to download it. Or check out more NPS resources

Every passive you can turn into a promoter will boost your NPS score. Do this by reaching out to anyone not already in the “promoter” camp and ask them what you can do better. And for those who are promoting you, find out what you’ve done to make them so happy, and do more of it!

How do I collect NPS feedback?

You’re tracking NPS because you care what your customers think of your organization. You want to promote yourself as a more customer-centric business.

This should be visible in the way you conduct NPS surveys. Simply sending out unsolicited emails is a missed opportunity to instead use the NPS survey as a device to reinforce a positive impression. There are a number of different ways you can gather NPS feedback. We have outlined 4 below:

Set Up Your NPS Survey Today Create a free Customer Thermometer account (No credit card required – Fully functional account). Set up an NPS survey and discover why over 10,000 teams choose CT to track, measure and improve their NPS program.

Email blast

You can send an email blast to your customers with an NPS survey question (On a scale of 0-10, with 10 being the most likely, how likely are you to recommend us to a friend or colleague?”) embedded right within from the body of the email message. This helps drive up the response rate as the customer can click from directly within the email they receive. They are incredibly simple to set up, totally configurable and can alert you to unhappy customers in real-time.

Embedded Signature surveys

If you’re regularly emailing your customers from Outlook or Gmail, you get get a regular pulse of feedback from the email signature area by adding the NPS feedback surveys so they’re always part of your signature. This is an excellent way of getting a steady stream of NPS feedback and shows how much you care about your customers as you have a visual representation of it in every email you send.

Embedded on website

By adding a simple pop-out window or side section to your website, you can easily gather NPS feedback from visitors to your website. This will allow you ask different questions – either NPS feedback surrounding your customers’ purchase experience on your website, or the quality of the information provided. You can also ask more general NPS questions about the company or brand.

On-site tablet feedback 

Many in-person events offer the opportunity to gather NPS feedback. If you offer training courses, run events, offer hospitality services or break-fix services on-site, these all represent excellent opportunities to get NPS feedback from customers at the exact point they are transacting with your business.

Whichever way you choose, customers will appreciate it if you make the NPS survey process fast and easy. Keep these guidelines in mind when you are deciding on your NPS survey:

  • Embedding NPS questions into existing email communications where applicable
  • Using an attractive and engaging template design that aligns with your brand
  • Employing visually appealing and immediately understandable response icons for your 0-10 NPS scale
  • Allowing customers to complete the survey via a simple 1-click process 
  • Using that single click to activate a redirect to a landing page with thank you message and optional follow-up questions (and supporting information/links)

Factors that affect NPS benchmarks?

There are a number of factors that affect NPS benchmarks:

  • Industry type – is it the business or product largely commodity-driven or service-driven
  • B2B v B2C – business buyers are often much less emotional and engaged with their purchase than consumers
  • Emotional perception of importance of company and/or product – people will rate things differently depending on how closely they emotionally relate to it
  • Regularity of interaction with the brand or company – the more regularly you interact with something the more you can take it for granted; the familiarity breeds contempt argument
  • Some studies, including one by the Harvard Business Review, have shown that gender can affect NPS score. Thus if you’re looking at benchmarks in a heavily gender-skewed market, this could be a factor

How often should I calculate my NPS score?

customer thermometer nps trend line graph

You can calculate your NPS score as often as you like. As a popular business KPI, many organizations report NPS to their board on a monthly basis. Any less frequently than annually would be very unusual.

Such is the nature of 24/7 business that some companies opt for a constant real-time monitoring of their NPS score. This is achieved by continually adding new data into the calculation. The trending result can be tracked over time using a visual dashboard like this:

Constantly monitoring NPS is useful for correlating the impact of events on customer behaviour. For example, say a spate of illness had left your support lines short-staffed, leading to long wait times. Monitoring NPS constantly would show you if this impacted on customer loyalty.

The other consideration regarding NPS frequency concerns relationships vs. transactions. If NPS is only scored at critical events (e.g. purchases, renewals, enquiries), you may get a different picture to if NPS is scored at regular intervals throughout the customer lifecycle. One will show you the transactional NPS while the other will show the relationship-based NPS. This is discussed in further detail here. 

How to understand your NPS results?

learn about nps

NPS gives you data to help inform business decisions. For example, a trend showing a steady decline in NPS should warrant further investigation into the reasons behind it. This in turn could influence any number of actions from product improvements to staff retraining. 

NPS is particularly useful as part of a basket of measures tracking customer experience in general. Correlating NPS scores with other feedback data can be very helpful in directing rapid and targeted action.

It’s important to not get carried away with the power of NPS. Net Promoter Score is a strong and, in many people’s opinions, reliable indicator of how loyal customers intend to be. However, NPS is not ‘truth’. It attempts to predict a future state, so cannot possibly be 100% accurate. ‘Promoters’ who affirm they are highly likely to recommend you may in fact not end up recommending you at all. Likewise, a ‘detractor’ may find aspects of your offer compelling enough to recommend, even though – overall – they say they wouldn’t recommend you at all. 

NPS Case Studiesgood customer feedback

AirBnB

AirBnB famously applied NPS scores to drive customer and business success. They started using it to add value to their customer feedback program. In particular, to determine whether NPS scores correlated with the likelihood that a guest would become a genuine advocate and potentially return in future.

They surveyed around 600,000 guests and found that two-thirds of those who responded were promoters and just 2% were detractors. Guests were indeed more likely to recommend the service to friends and family and would most likely book accommodation again.

High Point Networks

Another great example of NPS providing real value is High Point Networks. They started using Customer Thermometer because their previous survey tool wasn’t providing the response rate they needed. From over 1,000 tickets raised per month they were only receiving around 20 responses. CT boosted their response rates by a factor of x5!

It’s vital that High Point Networks consistently delivers exceptionally high standards of customer service. Using NPS showed that around 95% of their survey responses were either good or excellent. Their NPS score is consistently in the 90s, which is remarkable. They are monitoring their NPS score to ensure their standards don’t diminish. Also, to quickly identify where they may need to make changes in response to negative feedback patterns.

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