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NPS

Net Promoter Score: The Definitive Guide to NPS

Last edited: 16.1.2022

NPS net promoter score

Introduction to Net Promoter Score

What if I told you you could unlock outstanding customer service, increase loyalty and even boost revenues with one simple question –  would you believe me?

Welcome to the world of Net Promoter Scores (NPS).

You’ll have seen those one-question surveys pop up when you’re browsing a website, or in your emails. 

It asks how likely you are to recommend a company, product or service, and provide a scale of 0-10 for your response. 

net-promoter-score

You may even already use these to get a gauge of how much your customers like what you’re offering.

But NPS is so much more than just a simple question. 

It measures customer experience, and can also put you on the path to business growth by identifying pain points in your customer experience, what your customers love about you, and referral and upsell opportunities. 

We’ll be taking you through the 11 key things you need to know about Net Promoter Scores

  • What is a Net Promoter Score?
  • Why does NPS matter?
  • How do I calculate my Net Promoter Score?
  • When should I measure NPS?
  • How should I measure NPS?
  • Analyzing my Net Promoter Score
  • 4 ways to guide decision-making with NPS
  • Employee NPS vs Customer NPS
  • Net Promoter Score in research
  • Alternatives to NPS
  • Net Promoter Score Templates

Let’s get started. 

What is a Net Promoter Score?

Net Promoter Score (NPS) is a closed-loop feedback system used to provide insights into key areas of customer loyalty such as: 

  • Satisfaction
  • Retention
  • Engagement
  • Business growth

Developed by Fred Reichheld of Bain & Company, in collaboration with Satmetrix Systems, NPS was quickly touted as ‘The One Number You Need to Grow’, after its introduction in 2003.

This new metric said goodbye to lengthy customer satisfaction surveys and focusing on one key loyalty-based question: 

“How likely are you to recommend us to a friend or colleague?”

Rated on a scale of 1 to 10 (with 10 being most likely), the responses provided can be sorted into three main categories: Promoters, Passives, Detractors. 

nps-formula
  • Promoters: These are loyal enthusiasts and will help drive business growth. The more promoters you have, the better customer experience you’re providing. 
  • Passives: These customers are neutral – they like what you offer but aren’t necessarily loyal to your business. 
  • Detractors: These are your most unenthusiastic customers. They are more likely to share negative word of mouth.

NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters, and reported with a number between -100 and +100. 

Open-ended NPS questions 

NPS tells you what your customers feel about your business. 

Adding a qualitative question alongside the Net Promoter Score question allows you to dig into why people feel a certain way.

Traditionally the open-ended questions would have asked why a particular score was given.

See how customers are asked to explain their scores in the example below.

primary-reason-for-score

Increasingly, companies are using personalized follow-up questions in response to a particular score given.

The table below shows the different types of questions asked of different respondents. 

PromoterWhat did you love about your experience with us?
PassiveHow can we improve your experience?
DetractorTell us what was missing in your experience with us?

The responses from open-ended questions are critical in helping identify pain points, but can also be a great source of social proof. 

Positive feedback from Promoters can be turned into testimonials for your website or social channels, for example.

Why does NPS matter?

Two decades on from its introduction and Net Promoter Score (NPS) is still one of the most important ways to measure loyalty. 

We’ve outlined 4 reasons why NPS is still a core measurement of customer experience

1. Gauge customer loyalty

The higher the score, the happier your customers are. 

Promoters, those enthusiastic customers who will recommend your business to their friend or colleague, indicate how loyal customers are at that moment in time.  

“We will focus our organization on what we call Net Promoter score, which goes much beyond the pure customer satisfaction index,” said René Obermann, former CEO of T-Mobile International.

What’s more, the simplicity of the survey allows you to run the research on a regular basis so that you can benchmark loyalty and start tracking the trends. 

2. Faster insights

As a single question survey, it’s more likely to get a higher response rate than the longer surveys. It can also be analyzed and reported on faster, delivering insights to those who need them.

“Too many of today’s satisfaction survey processes yield complex information that’s months out of date by the time it reaches frontline managers.” Fred Reichheld, Bain & Company

3. Turn responses to revenue

NPS survey responses can pinpoint when and where in the customer journey loyalty is at its highest, identify those buyers who are prime for upselling or repeat purchases, and even help predict customer churn. 

Infact, research from Temkin showed that Promoters are 4.2 times more likely to buy again, 5.6 times more likely to forgive a company after a mistake and 7.2 times more likely to try a new offering compared with the Detractors.

Former CEO of Intuit, Steve Bennett, once said, “So what’s driving growth?… [W]e measure the customer experience using a system called Net Promoter. The higher the score, the more customers are delighted with the product and service experience and would recommend it to a friend.”

4. Common goal for business growth

It’s simplicity also means it can be used in different parts of your customer journey. In fact, Jason Lemkin, SaaStr, explains how NPS can help to encourage cross-functional working by giving every team the same goal to work towards:

It’s the voice of the customer.  If you have a high NPS score, you’re doing something right here, no matter the feature gaps or other issues.  If it’s low – take action, my friends.”

Are NPS systems too simple?

The simplicity is one reason that NPS attracts criticism. 

The Net Promoter Score system can help you identify your happy customers but alone, it provides very little information about what to do next. 

Step Hyken, CX expert and author of “The Convenience Revolution”, said: “Knowing the number is one thing. Knowing the “why” behind the number and how to use it to gain a competitive advantage is another”.

Once seen as the only business growth metric needed and the surest way to measure loyalty, most companies these days use other metrics alongside NPS to get the best overview of customer experience and company performance. 

Read our definitive guide to customer loyalty.

How do I calculate my Net Promoter Score?

A Net Promoter Score (NPS) is calculated by subtracting the percentage of Detractors from the percentage of Promoters. This will give you a score between -100 (no Promoters) and +100 (no Detractors)

calculate-my-nps

The more customers that rank your company as 9 or 10, the better your customer experience is.

For example, Alpha Inc has 42% Promoters, 39% Passives, 19% Detractors, creating a score of +23. 

This a great score for Alpha Inc showing that those buyers who are loyal outnumber those who are not. 

overview-of-nps-groups

But fast forward a few months and a few key business changes and Alpha’s Promoters drop to 32%, Passives increase to 42% and Detractors increase to 26%. 

While on the surface these may not seem like huge percentage leaps, the resulting NPS score drops to +6 – a sure sign that change is needed. 

nps-statistics-and-trends

Interestingly though, we can see that Alpha Inc has two courses of action – taking steps to turn the unhappy customers into happy ones. Or working on their customer experience to address those who are passive in order to build loyalty. 

When should I measure NPS?

As we’ve already mentioned, the simplicity of Net Promoter Score (NPS) means that it can be used as a key measure of customer experience in different ways.

Relationship NPS

Many businesses send out NPS surveys to their whole customer base at regular intervals, on a monthly or quarterly basis for example, to measure their sentiment. 

This example shows how Trustmary measures customer loyalty over time to build a progressing picture of the company’s reputation. 

longitudinal-measuring

“By regularly canvassing customer’s feedback, businesses create a benchmark against which they can measure their progress,” according to Arttu Haho, CMO of Trustmary. “The value from the data comes from the trend, rather than each score.” 

Transactional NPS

NPS also measures customer feedback after specific interactions with your brand.

For example, a company may canvas new customers after they’ve made their first purchase, or look for real-time feedback after launching a new service. 

Here’s an example of how it can be used to capture the customer’s experience after a support call:

transactional-nps-example

The event-based nature of these activities means that the NPS system can often be automated, and the survey triggered by a specific action. 

Many companies will use both relationship and transactional NPS surveys when measuring customer loyalty generally as well as specific experiences along the customer journey. 

Discover our Net Promoter Score Templates below.

 

How should I measure NPS?

The simplicity of the Net Promoter system makes it easy to distribute to customers via your existing communication channels. 

Most companies will use a combination of the following methods to capture customer feedback.

  1. Email 

Email is a simple way to collect customer feedback for both relationship and transactional NPS. Usually a link to the net promoter score question is provided in the email, sometimes with follow up questions. 

Survey emails can be easily automated to be triggered after key interactions with your company.

Here’s an example of how Trustmary uses email to ask transactional NPS questions:

email-nps-survey

While email is a great channel for NPS systems, one of its major drawbacks is that responses rely on open rates. A low email open rate results in poor responses to the survey.

Read more about how to use email for NPS

  1. SMS

Mobile has transformed customer behaviour. According to Gartner, SMS has a 98% open rate, compared to average email open rates of 20%.

The simplicity of NPS lends itself to the on-the-go nature of SMS making it a popular way to collect feedback. 

Here’s how Hem & Stitch use SMS to capture customer feedback:

nps-via-sms
  1. Website or in-app

Your website or app will often feature prominently in your customer journey which is why it’s a great place for an NPS survey. 

There are two ways to collect NPS responses via websites and apps: pop-ups and feedback tabs. 

A pop up does exactly that – it pops up as an overlay on screen when triggered at a specific point in the customer journey. This may be after they’ve visited a page 5 times, or after they’ve checked out. 

Here’s how Inbound.org uses pop ups to gauge satisfaction:

popup-net-promoter-score

A feedback tab sits to the side of the screen and can be expanded by the user to provide feedback. It’s more subtle than a pop up feature, but could also be more easily ignored.

Here’s an example of a feedback tab:

feedback-tab-nps

Read more about how to collect website NPS effectively

  1. In person

The rise of digital applications means that nowadays most NPS data is collected online or via mobile, however customer sentiment can also be measured in person. 

For example, companies may request that customer service representatives ask the NPS question at the end of a support call. 

Alternatively, a chain of shoe shops may have five-point NPS displays at tills that allow shoppers to register their level of satisfaction for that particular branch. 

In-person collection, however, has been criticised for creating interviewer bias in the responses.

Analyzing my Net Promoter Score

Your Net Promoter Score can guide business decision making and growth, but how do you analyze this crucial customer experience metric?

Here are 4 tips to help you analyze your NPS:

1. Segment your data

Segmenting your data can help you understand which segment has more Promoters or Detractors. 

The insights from segmenting your data can help you make better decisions based on your target group, amplify best practice and build more personalized experiences.

For example, by segmenting it’s NPS calculation, Beta Enterprises can see that clients from the financial services are the strongest brand evangelists and can then explore the key drivers for positive word of mouth in financial services.

2. Understand your NPS calculation

A ‘good’ NPS varies from industry to industry, and even from company to company, but generally speaking, keeping your score over 0 is a healthy place to be. A negative NPS is a sign of trouble. 

Below 0Between 0 and 30Higher than 30Over 70
Many issues to be addressed, possibly resulting in negative word of mouth Good but still room for improvement.Great – the company has far more happy customers than unhappy ones.Customers love you and your company is generating positive word-of-mouth from referrals.

3. Benchmark your NPS

A good NPS score is all relative. The following comparisons can help you understand how well you are performing.

  • Benchmarking to an agreed industry standard helps you understand what good looks like for your business. 
  • Comparing segments can help you understand where your Promoters and Detractors come from, and enables you to customize experiences by segment or use the data to provide actionable insights.
  • Different survey channels and collection methodologies can have a big impact on your overall NPS. 
  • Measuring your own customer experience regularly via an NPS program will help you see trends emerging. 

Which brings us on to…

4. Measure changes in your NPS

Tracking results from NPS and searching for trends over time builds a good picture of how your company is progressing from one quarter to the next.

Systematic customer feedback also identifies if customers respond well to new products or features. 

Continuous improvement to your NPS score indicates progress in customer experience and satisfaction, as well as the potential for business growth. 

Find out more about what a good NPS really looks like.

4 ways to guide decision-making with NPS

You have your NPS calculation, you’ve analyzed the results. Let’s explore the ways in which you can maximise the impact of your NPS through good decision-making.

1. Watch what you’re measuring

NPS is a proven metric for customer experience but too often moving the needle on the NPS score becomes the goal. 

As per Goodhart’s law, when a measure becomes a target, it ceases to be a good measure. You start missing the correlation between what’s going on in your business and your score, and taint the whole program with bias. 

“If your business is only focused on increasing Promoters, you’re missing valuable feedback from your Detractors,” said Arttu Haho, CEO of Trustmary US.

2. Utilize your indicator of organic growth 

Bain & Company conducted a study of competitors, comparing NPS scores to organic growth: “On average, an industry’s Net Promoter leader outgrew its competitors by a factor greater than two times.”

Customer Promoters are more likely to have:

  • Higher average purchase value and repurchase
  • Longer customer lifetime value 
  • Higher referral rates
  • Better engagement to offer ideas and feedback

A good NPS is an indicator of the potential for organic growth. Understand the factors that contribute to your score and work on them. 

If you’re using NPS in conjunction with other metrics, such as average purchase value or upsell ratio, you’ll soon be able to see the impact of your actions. 

3. Act fast on Detractors

Your Detractors are your biggest asset. No, really. 

Let’s think of NPS systems like focus groups. It’s always nice to hear how well you are doing, but the feedback you really need is what isn’t going so well, and where there is room for improvement. 

Understanding what your Detractors are thinking and feeling allows you to act. And time is really of the essence here. 

“If you make customers unhappy in the physical world, they might each tell 6 friends,” according to Jeff Bezos, CEO of Amazon, “If you make customers unhappy on the Internet, they can each tell 6,000 friends.”

Don’t forget to share the changes you’ve made based on their feedback. This is known as closing the loop. 

4. Follow up with your Promoters

93% of purchasers read online reviews before buying a product

Don’t forget to approach your Promoters after you’ve conducted your NPS to share reviews about your product or service. Sharing social proof is a great way to build trust in your products and services. 

Some tools like Trustmary’s platform make this process easier, by allowing you to convert qualitative NPS feedback directly into testimonials. 

follow-up-with-promoters

Read more about how to use social proof. 

Employee NPS vs Customer NPS

We’ve exclusively covered customer NPS in this article, but not to be forgotten is employee NPS.

Much like customer NPS, employee NPS (or eNPS) is used to measure the loyalty of employees working for an organization. 

Rather than asking about products and services, an eNPS will ask employees:

“How likely are you to recommend our organization as a place of work?”

Responses are ranked on the same scale of 1-10, and responses are measured and analyzed in the same way as customer NPS.

Net Promoter Score in research

In the past two decades since its introduction, NPS has secured its place as a core measurement of businesses across the world. 

While business leaders advocate the use of NPS to guide the company’s growth, academics are somewhat on the fence about the value that the metric provides. 

Here’s why. 

  • Most negative comments about a brand come from former or never customers, and so only sampling current customers paints an inaccurate picture of negative word of mouth. Robert East et al. (2011)
  • In relation to Reichheld’s initial methodology, historical growth rates can’t prove that the NPS is a leading indicator of growth. Byron Sharp (2008)
  • The Net Promoter System lacks peer-reviewed research to support its proponents’ claims of strong correlation with growth. Timothy Keiningham who conducted three studies on NPS
  • 52% of all people who actively discouraged others from using a brand had also actively recommended it. C Space (2019)
  • NPS predicted future growth metrics, but that NPS wasn’t statistically different from other measures, concluding that there is no single best metric. Van Doorn et al. (2013) 

Alternatives to NPS

The traditional NPS method isn’t the only customer experience metric. We explore some alternatives that you can try.

  • NPS variations – adjusting the scale to 0-5, or changing the wording to better suit your business purposes.
  • Customer Satisfaction (CSAT) – CSAT asks: “How satisfied were you with our service/product?” Customers then rank their level of satisfaction, usually on a scale from 1-5.
  • Customer Effort Score (CES) – Customer effort score ranks ease of use, a key factor to customer satisfaction. CES asks “How much effort did it take to deal with us?” and has respondents rank that level of effort on a 1-5 scale.
  • Churn rates – measures the percentage of customers that do not renew their business with a particular company.

Net Promoter Score Templates

Question 1 – rating question

How likely are you to recommend our [business/product/service] to a friend or colleague?

Question 2 – open-ended question

Tell us why you gave this score?

Or to customize your response you could ask the following questions: 

PromoterWhat did you love about your experience with us?
PassiveHow can we improve your experience?
DetractorTell us what was missing in your experience with us?

Thank you message

Thanks for your feedback. We want to create the best possible experience and your thoughts, ideas and suggestions help us make improvements to our [business/product/service]. 

At this point, could tailor your thank you message depending on the response received. For example:

PromoterThanks for your feedback. We’re pleased to hear that you love our [business/product/service]. Can we use your feedback as a testimonial for our marketing?
PassiveThanks for your feedback. We want to create the best possible experience and your feedback helps us make improvements to our [business/product/service]. 
DetractorThanks for your feedback. We’re sorry to hear that you’re not loving our [business/product/service] but we’re committed to doing better and your feedback will help us make improvements. 

Conclusion

NPS is a useful metric for businesses of all shapes and sizes, allowing you to measure your customer experience, gauge loyalty, return insights faster and fuel growth. 

However, the Net Promoter Score scale by itself is just a vanity number that companies should be careful doesn’t turn into a goal itself. 

NPS is best used as a diagnostic tool in conjunction with an open-ended question to find out why customers feel the way they do, and other metrics to get a complete picture of customer experience and opportunities for growth. 

Other ways to measure the happiness of your clientele include CSAT, CES and churn rates, but whichever method you use, ensure that you are making the most out of the feedback. 

Give your marketing a boost with social proof from your Promoters, or create an action plan to address pain points from your Detractors. 

Or as Michael LeBouef, business author, puts it: “A satisfied customer is the best business strategy of all.”

Frequently asked questions about Net Promoter Score

Is Net Promoter Score a worthwhile metric to use?

NPS is a great metric for measuring customer loyalty because:

  • It’s simple to measure.
  • It produces a number you can use to track your customer experience.
  • It can be used alongside other measures to paint a complete picture of how your business is performing.

How is NPS calculated?

The formula for NPS is simple:

% Promoters minus % Detractors

The result is a number between -100 and +100.

What is a good Net Promoter Score?

A good NPS is relative. 

It depends on your industry, competitors, and region, and most importantly, how your business has previously performed. 

Generally speaking, an NPS higher than 0 is a good starting point. 

What is a bad Net Promoter Score?

A bad NPS is considered to be anything lower than 0. This indicates that you have more unhappy customers than happy ones. 

What is a NPS question?

NPS is based on a single question.

“How likely are you to recommend us to a friend or colleague?”

This question can be reworded slightly depending on the audience, e.g. employees, or whether you’re measuring relationship NPS (sentiment towards the brand as a whole) or transactional NPS data (sentiment towards a particular product or service).

The NPS question should be followed up with additional questions to provide qualitative insights into why your buyers feel a certain way.

What questions should I ask alongside NPS?

NPS rating questions tell you what your clientele thinks, whereas an open-ended question helps you find out why:

An example of a general follow up question is: tell us in your own words why you gave this score?

Some specific follow up questions are:

  • Tell us what was missing in your experience with us?
  • What did you love about your experience with us?
  • How can we improve your experience?

How should an NPS survey be structured?

An effective NPS survey will be structured in two-parts: a rating question and an open-ended question. 

  • The rating question measures what your buyers feel, rated on a scale of 0 – 10. 
  • The open-ended question acts as a follow up and measures why a specific score was given.

Here’s an example of how a two-part NPS survey could look: 

Thanking your respondents for their time is a good way to finish your NPS survey, letting them know that you appreciate their feedback. 

What should I do about my Detractors?

NPS is effective at revealing what your clients don’t like about your company. Once you have your results, you should:

  • Use the qualitative data to find out why your Detractors are unhappy.
  • Explore other metrics that help measure customer experience. For example, if your detractors don’t like the UX of your new website, check if your bounce rates support this.
  • Act quickly to implement changes and let them know that you have done so. 
  • Measure again to see if your actions have an impact.

What should I do with my Promoters

Your Promoters are already enthusiastic about your business. Here’s how you can make the most of them:

  • Analyze open-ended responses to find out what your Promoters love about you.
  • Roll out any best practice to other segments.
  • Follow up with your Promoters to see if they’d be happy to provide a testimonial, or use a platform like Trustmary to turn qualitative responses into reviews, fast.
  • Identify growth opportunities you can test with your Promoters – after all, they’re more likely to buy more from your business, so trying out an upsell campaign may contribute to revenue growth. 

What kind of conclusions can I make from my NPS?

  • The NPS score alone can give you a general picture of sentiment towards your business, product or service. 
  • Qualitative follow-up questions allow you to start exploring what specifically is working, and what isn’t.
  • Combined alongside other metrics can help you pinpoint exactly where pain points lie and how these can be improved. 
  • Repeating the survey gives you the opportunity to follow your progress and monitor how changes are received. 

How often should you ask for NPS?

NPS should be measured regularly so that you are able to track trends. 

Generally speaking, measuring once a quarter to once a year will help you build a good picture of your progress. Whichever time frame you go with, remember to be consistent. 

Can I modify the NPS question?

NPS tends to have a standard format, however, the wording can be customized slightly according to the audience and the goals of your program.

How accurate is NPS?

The accuracy of your NPS can vary according to your collection methodology. For example, in person collection may result in a positive bias, or incentivising NPS could cause false positive results. 

While it may not be possible to eliminate bias altogether, taking a consistent approach to how you collect data each time you survey your customers will help create a reliable picture of loyalty and how it changes over time. 

Frequently asked questions

How much should I invest in lead generation?

As much as you can, if

  1. you know what the return on investment is
  2. The ROI pays off 

This varies between industries and companies. Pay attention to total lead value, customer acquisition costs, and customer lifetime value. Only invest as much as is reasonable. In other words, if you invest a dollar in lead generation and get five back each time, invest as much as possible.

does not exist when it comes to how much you can invest in lead generation, but we suggest that you track your ROI closely.

Lead generation refers to collecting information about your prospective customers. It can be done, for example, by cold calling or cold emailing your potential customers or by creating content that make them willingly give their contact information.

It’s a joint effort between these two groups. Their goal is the same: to get more customers and to grow revenue. Inbound lead generation is mostly done by marketing and sales does the outbound lead gen. However, that’s not always the case as nothing is set in stone and the most effective lead generation strategy acknowledges this.

Lead generation aims to nurture brand-aware prospects to move onwards on the purchasing journey. Demand generation tries to educate the market, for example, with quality content to realize that they have a problem and a specific company and solution can fix it. In other words, demand generation aims to create the demand and to drive awareness and interest.

If you don’t have any leads, you have no-one to sell your products and services to. 

Getting results varies between seconds to years. Use all types of tactics to get fast results (that might not be that qualified, yet) and long-term results (high-quality sales qualified leads). It’ll take you forever to get results if you never start.

Start doing lead generation with social proof by starting your free 14-trial here.

In case your resources are limited, it might be a good idea to outsource your lead generation. Pick a partner that really knows your industry and has a proven track record.

Anything you can think of! As we’re bombarded with offers, deals and ads on a daily basis, try to be creative in creating your lead generation tool kit.

Track how many of your leads are becoming paying customers or subscribers. That’ll give you first-hand information about lead quality. Furthermore, create a system for measuring your lead quality even during the purchasing process.

Better than your previous conversion rate was the previous month. Anything above 10% is outstanding, unless you had 11% last month. Then you’ve made changes you shouldn’t have.

Can be anything from a few percent to up to 90%. It all depends on:

  • Complexity of your product/service
  • Market sophistication
  • Price point
  • B2B or B2C customers

For example, when we were selling testimonial videos to customers, the average conversion rate from lead to sales was 17%, because the product was easy to understand. When people saw a testimonial video we made, they contacted us because they wanted to have one made for them. The product was easy to understand and they didn’t need convincing about the product, but more about us as a partner.