Net Promoter Score Explained: How to Calculate NPS

The Net Promoter Score (NPS) is a metric for assessing whether or not a customer would recommend your company, service, or product to others. The methodology was developed by Fred Reichheld, Bain & Company, and Satmetrix Systems in 2003 and is centered around a singular, 11-point scale question asking the consumer or employee how likely they are to recommend your business or service to a friend or colleague.
The data gathered from answers to this question measures customer loyalty and helps businesses identify areas in need of improvement. The higher the number your customers choose on the 11-point scale, the more likely they are to promote your business or service and help generate a positive growth cycle. To this end, the NPS is an excellent predictor for the growth of your company. However, one question alone cannot provide an entirely accurate depiction of the overall customer experience.

Customers are categorized into three groups depending on how they respond to an NPS survey.

1. 1. Promoters: Promoters are customers who provide a score of 9 or 10. These are your most loyal customers who will often spread word about your service or product to friends, family members, and colleagues. Promoters lead to new customers and are the fuel for growing your company.
2. 2. Detractors: Detractors are unlikely to endorse your product. These customers give a rating of 0 to 6, meaning they had a poor experience and probably will not be interested in returning to your business. A large number of detractors is harmful to your organization, as they are often willing to actively discourage others from purchasing your product through negative word of mouth.
3. 3. Passive: Passives are any customer who responds to the NPS question with a score of 7 or 8. While they will not endorse your brand, they are also unlikely to negatively impact it through word of mouth. Passives do not impact your overall score, but they are important to keep in mind. A few good experiences with your company might boost passives into the promoter category and increase your overall NPS.

Your NPS is calculated by taking stock of all responses to the ultimate question and subtracting the percentage of 0 to 6 responses (detractors) from the percentage of 9 and 10 responses (promoters). The NPS is expressed as an absolute number within the range of -100 to +100. For example, if 32 percent of survey respondents are promoters and 28 percent are detractors, your NPS is +4.

Net promoter scores vary widely depending on the industry. Generally, any positive score is considered to be good, because it means you have a greater number of promoters than detractors. Top performing companies boast scores between +50 and +80.

If your organization scores below 0, that means its detractors outnumber its promoters. It is important to know the average NPS score of your industry to understand how your business compares. A score of -2 isn’t necessarily bad if the average score in your industry is -13.

Your company’s NPS score can be improved by decreasing detractors and increasing promoters.

1. 1. Align team members behind a central goal. Establish a company-wide shared goal of gaining promoters. Loop employees into conversations about the company's NPS and reward individuals or groups based on their customer service to incentivize the company.
2. 2. Follow up with your detractors. Take swift action with unsatisfied customers by reaching out with follow-up questions or conducting a direct interview for customer feedback. Encourage managers to achieve high response rates to increase customer retention.
3. 3. Incorporate NPS feedback into employee training. Incorporate NPS case studies into training sessions and encourage professional development to better equip employees to meet customers’ needs.
4. 4. Hold NPS meetings. Leaders can hold regular NPS meetings for employees at all levels to brainstorm creative solutions to customer issues. NPS meetings can also help encourage alignment of the company and enthusiasm for offering excellent customer support.
5. 5. Be thorough in your NPS analysis. Track your company’s NPS score and analyze how it changes over time. Create internal NPS benchmarks and determine the impact of the score on your company’s growth rates. When you thoroughly examine the customer journey, you may find that complaints are not directed at the organization as a whole, but at the failure of a particular product or department. Understanding where your company is falling short will help you restructure the organization to help customers avoid a negative experience and improve relationships.

Get the MasterClass Annual Membership for exclusive access to video lessons taught by business luminaries, including Sara Blakely, Chris Voss, Robin Roberts, Bob Iger, Howard Schultz, Anna Wintour, and more.