What is NPS and how do you measure it?

NPS or Net Promoter Score is one of the most widely used customer loyalty KPI. It measures customer satisfaction with one question.

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How likely would you recommend a service / product to a friend or colleague?

The respondent answers the question on a scale of 1 to 10. 1 stands for a highly unlikely recommendation and 10 a very likely one.

Based on their answers, the respondents are divided into three categories:

9-10 = Promoters

7-8 = Passives

1-6 = Detractors

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).

What is a good NPS?

NPS scores vary across different industries, but a positive NPS (one that is higher than zero) is generally considered good, a NPS of +50 is generally deemed excellent, and anything over +70 is exceptional.

You can compare how you compare in your industry by taking a look at the data collected by NPS Benchmark.

Why NPS?

Although NPS has been criticized for its harsh formula, it is one of the most widely used metrics to study the quality of customer experience and customer loyalty.

• Research suggests that a question based on the likelihood of the recommendation helps to predict customer behavior and business performance effectively.
• From the customer’s point of view, the NPS survey is quick an easy to answer. In consequence the response rate is often higher as well.
• NPS is a simple, ready-to-use metric that makes it easy to evaluate the success of your customer experience management.
• NPS sends a clear message about how much your clients like your company.

To get the most out of NPS:

• In addition to the score itself it is important to find out the reasons why the respondents gave a certain answer. Obtain information about the things that should be done differently to turn Detractors and Passives into Promoters.
• Measure NPS regularly and study how developments and changes affect it.

Start measuring NPS today. 

NPS is not only one of the easiest metrics to use, but it also gives you insights on the success of your business.