The Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction with a company or product. It’s commonly used in businesses to assess the likelihood that customers would recommend the company’s products or services to others. The NPS is a simple yet effective way to gauge customer sentiment and loyalty.
NPS is calculated based on a single-question survey that typically asks:
“On a scale of 0 to 10, how likely are you to recommend our [product/service/company] to a friend or colleague?”
Based on their responses, customers are classified into three groups:
- Promoters (score 9–10): These are customers who are highly satisfied with the product or service and are likely to recommend it to others. They are considered loyal and enthusiastic advocates.
- Passives (score 7-8): These are customers who are somewhat satisfied but not overly enthusiastic. They might recommend the product or service if asked, but they are less likely to do so proactively.
- Detractors (score 0-6): These are customers who are dissatisfied with the product or service and might even discourage others from using it.
The Net Promoter Score is calculated by subtracting the percentage of detractors from the percentage of promoters. The score can range from -100 to +100. A higher NPS indicates a higher level of customer satisfaction and loyalty.
Mathematically, the NPS is calculated as follows:
NPS = (% of Promoters) – (% of Detractors)
The NPS provides a quick way for companies to assess customer sentiment and track changes over time. It’s not only a metric but also a starting point for understanding why customers feel the way they do and for identifying areas for improvement.
Here’s how NPS scores are typically interpreted:
- NPS > 70: Excellent (highly satisfied customers and strong loyalty)
- NPS 50–70: Good (satisfied customers with room for improvement)
- NPS 0-49: Needs Improvement (mixed sentiment, potential areas for concern)
- NPS < 0: Critical (high dissatisfaction and low loyalty)
Keep in mind that while the NPS is a valuable metric, it’s important to supplement it with additional customer feedback and analysis to fully understand the factors driving customer sentiment.