What Is Net Promoter Score (NPS)?


The Gist

  • Importance of measurement. Net Promoter Score (NPS) is a critical metric for gauging customer loyalty and satisfaction. 
  • NPS calculation. Companies can calculate NPS by looking at the percentage of your brand’s promoters and detractors.
  • Strategic application. NPS allows brands to pinpoint areas for improvement, foster positive word-of-mouth and drive business growth. 

Editor’s Note: This article has been updated on March 4, 2024 to include new data and information. The original content was authored by Dom Nicastro. 

In a world where every customer’s opinion can be amplified through social media and online reviews, understanding and measuring customer loyalty has never been more critical. Enter the Net Promoter Score (NPS), a powerful tool in the arsenal of customer experience (CX) professionals. The NPS metric aims to capture the essence of customer relationships with a single, straightforward question. 

But what is net promoter score, and why has it become a benchmark in industries ranging from tech giants to local service providers? 

What Is Net Promoter Score?

Net Promoter Score is one of the most common customer experience benchmarks for measuring customer loyalty and satisfaction. It asks customers the question: How likely are you to recommend this product/service to someone else? Many organizations and CX pros use the NPS metric in conjunction with Customer Satisfaction Score (CSAT), Customer Effort Score (CES), Customer Lifetime Value (CLV) and Customer Churn Rate.  

“The NPS is the most accurate measure of customer satisfaction and the likelihood of recommending a product to friends, colleagues and their professional network,” said Paul Staelin, chief customer officer at Vercel and previously chief customer officer at Trifacta. “Even better, an NPS gives CX professionals a data-driven measurement of the success of our customer engagement and of the product itself.”

Why Use Net Promoter Score? 

Net Promoter Score is a benchmark for customer experience, said Staelin. This is especially true for software as a service (SaaS) providers who measure how customers perceive businesses. “In today’s competitive market for enterprise technology organizations especially, entire CX programs are built around improving this metric.”

Some key benefits of using Net Promoter Score include:

  • Determining your customers’ level of satisfaction with your product or service
  • Deploying customer experience metrics simply without a big resource and time grab
  • Using data-driven customer experience feedback to drive action
  • Sharing your positive feedback publicly with customers and prospects 

Related Article: Net Promoter Score: Top 3 Impactful Trends

How to Calculate Net Promoter Score

How is NPS measured? It’s all based on the question: How likely are you to recommend the product/service? The net promoter score survey allows customers to choose a score between 0 and 10, with 0 meaning “not likely at all,” and 10 meaning “very likely.”

The net promoter score scale breaks down what your customers look like based on their chosen NPS scores. 

The Net Promoter Score Scale, showing detractors, passives and promoters
  • Promoters: Answer with a 9 or 10
  • Passives: Answer with a 7 or 8
  • Detractors: Answer with a 6 or lower

To calculate your final NPS score, subtract the percentage of detractors from the percentage of promoters:

Net Promoter Score calculation, which takes the percentage of detractors and subtracts them from the percentage of promoters

Promoters Percentage – Detractors Percentage = NPS

For example, if 20% are detractors and 80% are promoters, your NPS score is 60. The best score would be 100, and the worst score would be -100.

What’s a Good Net Promoter Score?

A good NPS score falls above 20%, according to Staelin. “However, for enterprise technology, I believe 30% is world-class since companies buying technology for business services are notoriously demanding.” For example, Trifacta’s NPS falls around 84%, scoring even higher than iPhone’s “famously positive CX,” according to Staelin, which had an NPS of 63.

In order to be a successful enterprise technology solution, create CX programs that will get your NPS much higher, Staelin added. The market is incredibly competitive, so customer retention and continual successful use cases of your product have become more important than ever before “With that in mind, most technology companies aim to have an NPS of 30. We shoot for a score over 50.”

How Does NPS Work? 9 Steps for Deployment 

Brands that want to deploy a net promoter score system should follow the steps below: 


Source link