NPS - Net Promoter Score

Golden Rule: First treat your customers as you’d want to be treated.

Then ask this question: "In point scale 1 to 10, would you recommend us to a friend?" 

Net Promoter Score (NPS) Rough Calculation: % of Promoter customers (scale 9 or 10) — (minus)  % of Detractors (scale 6 or less) = NPS. 

NPS is part of your Testimonial or Review generating system. 

Numerous research studies have shown that the Net Promoter Scores—NPS—correlates with business growth. In fact, studies by the Harvard Business Review and Satmetrix have found that companies ranging from banking to car-rental companies show higher income when they improve their Net Promoter Scores.

Many companies—striving for unprecedented growth by cultivating intensely loyal customers—invest lots of time and money measuring customer satisfaction. But most of the yardsticks they use are complex, yield ambiguous results, and don’t necessarily correlate to profits or growth.

The good news is: you don’t need expensive surveys and complex statistical models. You only have to ask your customers one question: “How likely is it that you would recommend our company to a friend or colleague?” The more “promoters” your company has, the bigger its growth.

Why is willingness to promote your company such a strong indicator of loyalty—and growth? Because when customers recommend you, they’re putting their reputations on the line. And they’ll take that risk only if they’re intensely loyal.

By asking this one question, you collect simple and timely data that correlate with growth. You also get responses you can easily interpret and communicate. Your message to employees—“Get more promoters and fewer detractors”—becomes clear-cut, actionable, and motivating, especially when tied to incentives.

So, if you’re looking for a more scientific way than just relying on online reviews to understand your brand’s strength, the NPS is a straightforward system to use, and one of its big benefits is that it allows you to benchmark your company’s results against others in your industry.

Note: We will release benchmark data soon for you to use. 

How the NPS formula works

Just as the main question of the Net Promoter Score sample survey is fairly simple, the Net Promoter Score calculation system is too. At first glance, it may seem rather complicated, but we’ll show you how to break it down and make figuring out your Net Promoter Score an easy process.

The Net Promoter Score Scale

To get started, customers are asked to rate their likelihood of recommending a company to a friend or colleague by using a 0-10 point scale:
The number on the scale that a customer chooses is then classified into one of the categories: “Detractors,” “Passives,” and “Promoters.”
Score breakdowns:
0 – 6: Detractors
7 – 8: Passives
9-10: Promoters

You can think of the NPS system as similar to a four-star system on an online review, but the NPS scale gives you a broader way (and a more accurate method) to measure customer’s opinions.

How to calculate your company’s Net Promoter Score

Let’s say you’ve sent out an online poll with the NPS question and the 0-10 scale, and you’ve received 100 responses from customers. What do you do with the results? Is it as simple as averaging the responses? Well, not quite. But it’s almost that easy.
The NPS system gives you a percentage, based on the classification that respondents fall into—from Detractors to Promoters. So to calculate the percentage, follow these steps:
– Enter all of the survey responses into an Excel spreadsheet.– Now, break down the responses by Detractors, Passives, and Promoters.– Add up the total responses from each group.– To get the percentage, take the group total and divide it by the total number of survey responses.– Now, subtract the percentage total of Detractors from the percentage total of Promoters—this is your NPS score.

Let’s break it down:

(Number of Promoters — Number of Detractors) / (Number of Respondents) x 100

Example: If you received 100 responses to your survey:
10 responses were in the 0–6 range (Detractors)
20 responses were in the 7–8 range (Passives)
70 responses were in the 9–10 range (Promoters)

When you calculate the percentages for each group, you get 10%, 20%, and 70% respectively.
To finish up, subtract 10% (Detractors) from 70% (Promoters), which equals 60%. Since an example Net Promoter Score is always shown as just an integer and not a percentage, your NPS is simply 60. (And yes, you can have a negative NPS, as your score can range from -100 to +100.)

Or let Maxment handle the Net Promoter Score calculations for you: (Coming soon)

If you wish to speed up the process, Maxment (via our Auto Testimonials System & CRM system) will tabulate the NPS scores for you when you send your online poll/survey  to your customers. 

Remember, the beauty of the NPS system is its simplicity, so don’t get carried away by adding a lot more questions to the example questionnaire, and avoid too many questions that ask about all of the parts of your business.

Instead, the targeted follow-up questions, also called diagnostic questions, will help you learn from your Detractors (the “What can we do to improve?” question) and from your Promoters (the “What are we doing really well?” question). It’s that simple.

You’ve finished your Net Promoter Score Calculation. Now what?

So you’ve sent out the NPS survey sample to your customers. You’ve compiled the results and ran the numbers. You now have your Net Promoter Score number—maybe it’s a 52. Is that good or bad?
Well, like many things in life, it’s really all relative. If your competitors have NPS numbers in the high 60s, you’re probably going to try to figure out out where your brand could improve. On the other hand, if your competitors all have scores in the low 40s, you’re doing just fine.
Instead of taking wild guesses as to where your competition stands, why not let Maxment do the work for you? We offer NPS benchmarks so you can get context for your Net Promoter Score.
How it works is simple: We’ve gone through hundreds of industries and ran the numbers. We’ll give you a comparison scale for your industry so you can see how you rank. Use the data to understand where your company could make improvements—or take the results as confirmation that you should keep doing what you’re doing if it turns out you rank high against your competition.
Ready to get started? We’ve got everything you need to get your Net Promoter Score. Send our example NPS questionnaire to your customers to learn whether they like your brand so much they’d recommend it.

NPS, Net Promoter & Net Promoter Score are registered trademarks of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.

Related articles:

NPS OnPoint by Harvard Busines Review (one page)

NPS detail article by Fred Reichheld (9 pages)Reichheld (9 pages)