What is a Net Promoter Score and Why Does It Matter?

If you’ve ever attempted to acquire feedback from your customers via a survey, you may have encountered the concept of the Net Promoter Score (NPS). While some customer feedback solicitation methods offer only three response options (great, average, and poor), the Net Promoter Score works with a 10-level response scale focusing on the customer’s likelihood to refer the product or service to a friend. 

Following a straightforward calculation of customer responses, a business can analyze the resulting Net Promoter Score and use this information to create more targeted marketing campaigns and make positive and effective changes to the overall customer experience.

Calculating Your NPS

The Net Promoter Score (hereafter NPS) was first formulated as a measurement tool to gauge customer loyalty by Bain & Company, Inc. in 2003. Because of its usefulness in customer satisfaction research and purported correlation with revenue growth, it has gone on to be adopted across a wide range of industries.

The NPS is set as an index from -100 to 100. A positive score indicates your customers have an overall positive impression of your product or service. In turn, a score in the negative range suggests your product or service is leaving a generally negative impression on consumers.

In order to calculate the score component of the NPS, you must first survey your customers by asking them a single question: 

“On a scale from 0 to 10, how likely are you to recommend this product/service to a friend?” 

Respondents are then sorted into three categories based on their responses.

  1. Detractors. Responses between 0 and 6. These are individuals who are not satisfied with the product or service. 
  2. Passive. Responses of 7 or 8. These customers do not have a strong negative or positive opinion regarding the product or service.
  3. Promoters. Responses of 9 or 10. These customers are most likely to advocate for the product or service.  

Once the responses have been sorted, you can calculate the NPS by subtracting the percentage of Detractors from the percentage of Promoters. 

For example, if you find 50% of respondents are Detractors, 10% are Passive, and 40% are Promoters, you’d subtract 50 from 40 for a final NPS of -10. As this score falls in the negative range, it would indicate that you need to work on improving your customer experience.

If 20% of respondents are Detractors, 40% are Passive, and 40% are Promoters, your NPS would be 20. A positive score that still indicates room for improvement. Focusing on moving those individuals in the Passive group to Promoters would benefit your brand.

It should be noted that the average NPS of businesses varies quite a bit from industry to industry. According to Listen360’s 2019-20 Benchmark, boutique fitness concepts have a median NPS of 82, while big box gyms have center around a score of 59.

Understanding How to Use Your NPS

Your NPS offers valuable insight into the customer experience and can be leveraged in numerous ways. Here are just a few of the different goals you can accomplish by analyzing what this score means for your business:

  • Pinpointing fixable issues. Monitoring NPS feedback over time, rather than taking a one-time measurement and calling it a day, can help you get a handle on your brand’s “normal” score range. This allows you to quickly identify and resolve issues that cause a sudden downturn in customer satisfaction.
  • Improving customer acquisition. As customers who respond to the NPS survey with a 9 or 10 are prepared to recommend your product or service to their friends, why not ask them to follow through on this? There are several ways you can prompt them to use word-of-mouth techniques to promote your business, including creating a customer advocacy board or encouraging engagement through an online community created specifically for these individuals.
  • Recognizing patterns in customer segmentation. In some cases, it may not be possible to make changes to areas of service that turn Detractors into Passives or Promoters. Instead, you can focus efforts on identifying the similarities the individuals in the Promoter group share and use targeted marketing efforts to find more customers who fit this same persona.