The NPS method is popular around the world, and it has plenty of advantages worth highlighting; above all its simplicity.

But what is the NPS? NPS surveys are based on a single question: How likely is it that you would recommend us to a friend or colleague? Your customers are then asked to respond on a scale of 1–10, and that number is used to divide your customers into three groups: Promoters, Passives, and Detractors.

Promoters, who respond 9–10, are loyal, returning customers who recommend you to friends and family.
Passives,who respond 7–8, are satisfied customers but don’t have any particular preference for your company. They can therefore be coaxed away by the competition and aren’t as likely to praise you to everyone they meet.
Detractors, who respond 0–6, are dissatisfied customers who are on their way out of your customer relation – if they haven’t already left, that is.

Your Net Promoter Score is calculated by subtracting your detractors from your promoters. For instance, if you have 45% promoters and 25% detractors, your NPS is 20%.

NPS looks a lot like a Customer Satisfaction Score (CSAT), but there is a significant difference. CSAT measures satisfaction with products and services, while NPS measures relational aspects and loyalty.

From our point of view, the more interesting number is your NPS score because it is the starting point of future customer loyalty initiatives. However, it can’t stand on its own – creating value takes more. It requires relevant, well-worded follow-up causal questions that have been carefully weighed against the simplicity of the NPS metrics and what you want to get out of the survey.

But an NPS survey does provide a good starting point in the form of one concrete measurement and an overview of how your customers score.

How is NPS measured?

The core of an NPS survey is the question: ”How likely is it that you would recommend…”, and the timing and context of this question is crucial. The optimal timing and frequency can vary depending on industry and needs, but two responses a year on the same topic is usually enough for most companies.

Whether the question comes in connection with a transaction, or out of the blue depends on several factors. There are advantages and disadvantages to both approaches, and often a combination of the two is the most optimal. We differentiate between tNPS, which is transaction-based, and rNPS, which is relation-based.

A high proportion of NPS surveys are conducted by email, which is a fine method with many advantages for both you and your customers. However, there is a risk that your email will get lost in a deluge of other emails from companies requesting feedback and reviews.

Text messages also work well, and can be a good way to cut through the noise in people’s inboxes. The only disadvantage is that customers may be less likely to provide complete responses to the follow-up questions on a cell phone.

If you have a webshop, an NPS survey can be added to your check-out flow. However, this will only result in a transaction-related rating. The same applies when you collect NPS data in person – either via a store employee or a tablet at the exit.

What is a good NPS score?

It’s important to note that a good NPS score is highly industry dependent, so it makes good sense to benchmark against the average for your industry. The average will typically be higher for car dealerships than for telecom, for example. One reason is that customers are more invested in a car, both financially and emotionally, than in the company that sends them their phone bill.

Generally, any score above 0, while not a super score, is at least positive.

As a rule of thumb:

-100–0: needs improvement

0–30: acceptable – but not impressive

30–70: good – what most strive for

70–100: fantastic – only the very best companies in the world score this high

But no matter what your first Net Promoter Score is – it’s good, because it gives you a starting point for benchmarking future scores.

How do you get from data to measurable results on your bottom line?

An NPS survey takes the temperature of your customer loyalty and calls attention to any problems. It enables you to address issues pertaining to your detractors, so your relationship doesn’t go completely sour. And you get a chance to take steps to improve relations with your passives and hopefully convert them into promoters.

You can create added value when you have more data to support your NPS score. In its simplest form, asking one follow-up question can add tremendous value to your survey:

What can we do better? for your detractors
What would it take for you to give us 9 or 10? for your passives
What are you most satisfied with? for your promoters

If you ask your respondents to expand on their answers, this will give you valuable qualitative data you can build on – instead of the purely quantitative temperature metric from just one question.

The greatest value comes from obtaining significantly more data to support your NPS score. An rNPS, which measures customer relations, will ideally contain 15–25 follow-up questions – in addition to the NPS question.

Advantages and disadvantages of NPS

At Loyalty Group we’re great fans of NPS surveys as a useful resource for shedding light on customer loyalty efforts. However, we also believe that a Net Promoter Score shouldn’t stand alone. There are many advantages and disadvantages to the method, which you should carefully consider before deciding to employ it – and remember that many of the disadvantages can be offset by supplementary efforts.

Advantages of NPS

Easy to understand and communicate
Easy to implement in practice
One simple number to focus on
Simplicity makes it easier to get respondents to answer
Can by utilized at different levels
Can provide an indication of growth rate
Puts customer centricity on the agenda
Easy to use for benchmarking

Disadvantages of NPS

Doesn’t show explicitly what needs optimizing
Doesn’t show customer’s repurchase willingness
Not proven as better than other models
Doesn’t address the passives group who aren’t part of the calculation
Can develop in the opposite direction in relation to other KPIs
Requires strict discipline and data consistency
Doesn’t account for different markets
Doesn’t account for cultural response patterns – it’s easier to score 10 in a big city than out in the country

Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

Studies have demonstrated a correlation between a company’s Net Promoter Score and its ability to grow. If you’re interested in the growth of your company, you should also be interested in your NPS.

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