Net Promoter Score: Detailed Guide + Calculation Tips

What is a net promoter score?

Net promoter score (NPS) is a metric that quantifies customer loyalty by asking customers how likely they are to recommend a company or product, rated on a 0-10 scale. 

It gauges overall customer sentiment towards a brand using a single question, resulting in scores ranging from -100 to +100. You can deploy your NPS survey after specific events (at checkout or website exit) to gauge how consumers feel about your brand at the moment.   

However, unlike metrics like customer effort score, which solely focus on specific interactions, NPS can also indicate a customer's holistic perception of a brand. A higher score indicates stronger loyalty and satisfaction.   

Insights from NPS evaluation bring a certain cultural shift in a business, helping teams work in unison to attain common goals. It provides every contributor with a targeted push that results in maximum customer satisfaction.  

Net promoter score was developed by Fred Reichheld of Bain & Company in 2003 with the intention of providing businesses with a concise tool to understand and enhance customer loyalty. However, NPS evaluation becomes all the more meaningful when it is a part of the larger Net Promoter System that includes follow-up questions and results interpretation.  

Evolution of NPS in customer service 

The Net Promoter Score (NPS) has undergone significant evolution in the customer service world. From 2003 to this day, it has transformed itself from a simple metric into a comprehensive tool for gauging customer loyalty and satisfaction. Initially introduced as a straightforward way to measure customer willingness to recommend a company’s products or services, NPS has expanded its scope and application. Let’s understand it through a timeline. 

Evolution of NPS — A Timeline

2003: Introduction  

Fred Reichheld, a Bain & Company consultant, introduces the concept of Net Promoter Score in his article, "The One Number You Need to Grow." He proposes NPS as a simple, effective tool for measuring customer loyalty.  

2004: Early adoption  

Companies begin adopting NPS to measure customer satisfaction and loyalty. Early adopters include organizations seeking a straightforward metric to gauge and improve customer experiences. 

2007: NPS becomes mainstream 

NPS has gained widespread recognition and adoption across various industries. Books like "The Ultimate Question" by Fred Reichheld further popularize the metric, providing detailed insights into its application. 

2010: Integration with customer experience strategies  

Businesses start integrating NPS into broader customer experience strategies. Companies use NPS not only to measure loyalty but also to drive operational improvements and align their customer service efforts with strategic goals. 

2012: Technological advancements 

Advances in technology lead to the development of specialized NPS software and platforms. These tools allow for real-time data collection, analysis, and reporting, making it easier for companies to track and act on NPS feedback.

2015: NPS and customer feedback ecosystems  

NPS is integrated into comprehensive customer feedback ecosystems. Companies combine NPS with other metrics and feedback channels (such as Customer Satisfaction Score and Customer Effort Score) to gain a more holistic view of customer experience.  

2018: Emphasis on actionable insights  

There is a growing focus on turning NPS data into actionable insights. Businesses invest in training and processes to ensure that feedback is used effectively to improve service and address customer concerns. 

2020: NPS and digital transformation 

The COVID-19 pandemic accelerates digital transformation, leading to an increased emphasis on virtual customer interactions. NPS adapts to new channels and touchpoints, with a greater focus on understanding digital customer journeys. 

2023: Advanced analytics and AI integration  

AI and advanced analytics become integral to NPS. Companies leverage machine learning to predict trends, automate feedback analysis, and personalize responses, enhancing the ability to drive customer-centric improvements. 

2024: Focus on comprehensive experience management 

NPS is part of a broader customer experience management strategy. Organizations use it in conjunction with other metrics and qualitative feedback to create a unified view of customer loyalty, enabling more precise and impactful enhancements to the customer journey.  

This timeline highlights how NPS has evolved from a simple metric to a critical component of comprehensive customer experience strategies, reflecting broader trends in customer service and technology. 

Common misconceptions about the net promoter survey

Despite its widespread use, Net Promoter Score (NPS) is often misunderstood. Here, we'll debunk some common myths to provide a clearer understanding of its value and limitations.      

Myth 1: NPS can’t predict growth 

One common misconception is that NPS doesn’t correlate with business growth. In reality, numerous studies have shown a strong link between high NPS scores and revenue growth. Companies that focus on improving their NPS often see financial gains, as the score reflects customer loyalty—a key driver of long-term success. 

Myth 2: NPS isn’t actionable 

Some critics argue that NPS is just a number and doesn’t offer actionable insights. While NPS alone is diagnostic, its true power lies in the feedback that accompanies the score. Understanding why customers rate your business the way they do allows you to take targeted actions to address concerns, improve satisfaction, and increase loyalty. 

Myth 3: NPS only measures customer experience 

It’s often believed that NPS is solely a customer experience metric. However, NPS is a broader measure of customer loyalty and their willingness to recommend your business. It’s crucial to use NPS alongside other metrics to get a comprehensive view of customer experience and loyalty. 

Myth 4: NPS fails to predict loyalty behaviors 

There’s a misconception that NPS is not a reliable predictor of future customer loyalty. While it's true that multiple questions can provide deeper insights, NPS remains a strong indicator of loyalty when used correctly. By acting on NPS feedback, businesses can cultivate more brand advocates and foster growth. 

Myth 5: A high NPS is always good enough 

A high NPS can look impressive, but it doesn’t tell the whole story. Without understanding what drives those scores, you might miss key opportunities to further enhance customer satisfaction or address hidden issues. NPS should be part of a broader strategy that includes ongoing customer feedback and improvement efforts. 

NPS vs. CSAT vs. CES 

Now that you understand what NPS is, its evolution and the myths involved, let’s understand how it fares in comparison to other customer experience metrics - customer satisfaction (CSAT) and customer effort score (CES). 

How do you calculate NPS?  

To calculate your net promoter score, you need to design an NPS survey, which is a single question customer survey asking,  

"On a scale of 0 to 10, how likely are you to recommend us to a friend or a relative?" 

Your score will give you a clear idea of how happy customers are with your service. A customer’s score becomes the basis for classifying them as either promoters, passives or detractors.     

• Promoters are satisfied, happy customers who give a score of 9 or above: These loyal customers have a high probability of becoming advocates of your brand and are highly satisfied with your offerings.   

• Passives are satisfied, but not fully engaged customers who give a score of either 7 or 8: These customers are neutral and are neither satisfied nor dissatisfied with your offerings.  

• Detractors are customers unhappy with their experience and give a score between 0 and 6: These customers did not like your offerings and are more likely to leave bad reviews or poor feedback about your company.   

The net promoter score utilizes a scale of 0–10, purposefully designed to avoid ambiguous feedback. While a 0 might be considered overly harsh, rendering little constructive criticism, a 5 out of 5 may be viewed as merely satisfactory, lacking nuance.   

A 0-10 scale, on the other hand, offers a broader spectrum, elucidating precise customer sentiments. The wide spectrum helps you understand not just if customers are satisfied, but how much they really like or dislike the product.  

Read more: Understand Sentiment Analysis: A Guide 

Interpretation of net promoter score 

To interpret NPS, understand that it is a value determined on a scale of -100 to +100 — not in percentages.  

When NPS is below zero, it indicates that there are more detractors than promoters. Here’s what it means for your business:    

1. Higher churn rate: A negative score may point to a higher likelihood of customers discontinuing your service or product.  

2. Reduced referral potential: Detractors are less likely to recommend your service, limiting organic growth.  

3. Potential brand damage: Dissatisfied customers might spread negative word-of-mouth, impacting the brand's online reputation.  

Conversely, a positive NPS indicates more promoters than detractors. It has the following business implications.    

1. Growth potential: A higher volume of promoters can lead to increased referrals, boosting organic growth.   

2. Positive brand perception: Promoters often champion the brand, have higher customer lifetime value and reinforce market reputation. 

5 benefits of using net promoter score in customer service 

NPS can singlehandedly act as your North Star metric to help you gauge the health of your business. Here is why it’s important.   

1. Better customer focus  

NPS helps realign your teams with customers at the core of every initiative they take. It helps them work towards the common goal of building a happier, satisfied customer base. Since the very nature of NPS is user feedback, consistent evaluation keeps businesses attuned to the voice of the customer. This continuous loop of feedback ensures that your business shifts from mere reactive measures to a proactive customer service strategy — anticipating needs and optimizing offerings to align with customer expectations.    

2. Risk predictor 

NPS is about understanding the present and predicting the future. A steady increase in passives, even if detractors are not rising, could signal a potential slide into indifference. On the other hand, detractors are disproportionately responsible for spreading negative word-of-mouth — which is a significant risk. Bain and Company, in fact, claim that detractors are the cause of more than 80% of the negative publicity a brand receives. This foresight allows businesses to act pre-emptively, perhaps by introducing fresh engagement strategies or by re-evaluating what the evolving customer base seeks.  

3. Strategic decision support  

With the multitude of metrics available to businesses today, it can become daunting to prioritize areas of focus. NPS simplifies this. Should resources be allocated towards improving a product, or should there be more emphasis on after-sales service? A careful analysis of NPS can guide businesses on where to invest next.   

4. Cross-functional alignment  

Since NPS is a holistic measure, its implications span across departments. If customers voice concerns about product usability, it's not just the product team's responsibility. Marketing needs to be aware to align communications and customer service should be prepped for potential queries.   

5. Internal efficiency  

NPS serves as a barometer for the health of the entire customer journey.. When customers assign a score, they're not just reflecting a singular experience, but the culmination of all interactions with a brand. Accompanying comments or feedback provides invaluable insights into why customers rated the way they did. This singular metric can pinpoint areas that are underperforming.  

For instance, if a business releases a new product version and the NPS dips, it's a clear signal that the recent update may not have resonated well, allowing for effective course correction.  

How to build a net promoter score survey 

NPS survey is your key tool used to gauge customer loyalty. Crafting a well-thought-out NPS survey ensures that you're not just gathering numbers but actionable insights that can shape your brand's future strategy and enhance customer relationships. Here’s how to create and implement a net promoter score survey:  

Step 1:  Choosing the right platform  

The platform is your foundation. Your choice of platform dictates the depth of insights and actionable data you can obtain. So, instead of basic survey tools, consider using a platform for complete customer experience management. A CXM platform doesn't just record scores; it offers a panoramic view of every customer touchpoint, from web visits to customer support interactions.   

For instance, if a detractor had a recent negative customer support interaction, the platform might reveal this, allowing for a more contextual understanding of their score.    

Step 2: Including the right demographic questions  

Demographics can be a powerful tool to segment and interpret data. Knowing that a majority of your detractors are from a particular age group or location can be enlightening. For example, if younger audiences consistently rate you low, perhaps there's a disconnect between your offerings and their expectations.   

However, brevity is key. If you have this data from other sources, like a CRM system, skip this to ensure your survey remains concise.  

Step 3: Devising the core NPS question  

The heart of your survey is asking customers about their likelihood to recommend your service or product. Here are a couple of tips to help you build the most effective core NPS question.  

Focus on key interactions: Identify the most impactful customer touchpoints and center your question on that experience. If you're a service provider, it might be post-service feedback; for product-based businesses, it might be post-purchase  

Test and iterate: Before finalizing, test your question in a small group. Get and act on feedback before rolling it out on a larger scale. A/B testing different phrasings can also help identify which resonates most with your audience.   

💡Growth hack time 

Sprinklr’s conversational surveys are incredibly easy to set up, with templates and question variations ready to go. 

Do you want to makes this a global survey? No problem. Here’s what you’ll get with Sprinklr surveys: 

🌍 Translation into over 150 languages—because everyone deserves a say 

🎥 Rich media support to keep things lively 

🔒 Built-in brand compliance—so you don't step on any toes 

If you’re keen to see how all of this happens, contact us for a free demo today.  

Step 4: Understanding the “Why” behind the score  

While the score gives a quantitative measure, the reasons behind it offer qualitative insights. Asking respondents why they chose a particular score paints a clearer picture of their experience. For example, while a score of “2” indicates dissatisfaction, knowing it's because of "long wait times on support calls" offers a tangible action point. Here’s what the two questions would look like:    

Step 5: Gathering constructive feedback  

Direct feedback is gold. Encourage respondents to share suggestions. Prompt your customers with thought-provoking questions to surface their sentiments that they wouldn’t otherwise bring up.   

For example, responses to “How can we make the payment process simpler for you?” will definitively provide clear direction for improvement.   

By acting on these insights, not only can you enhance the customer experience, but you also show customers that their feedback is valued and impactful.   

Step 6: Seeking permission for further engagement  

Personal follow-ups can make a world of difference, especially with detractors. Ensure that you explicitly ask all respondents for their consent to contact them again, should the need arise.   

Imagine a user who's upset due to a defective product delivery. Reaching out directly can help resolve their grievance, potentially altering their overall perception of your brand.    

Always seek permission to engage further, ensuring you respect their privacy. If they agree, ensure you have their preferred contact method. 

How to drive business growth by measuring NPS 

The value of the NPS is evident in the following examples of Magoosh and Slack, two companies from distinct sectors.  

Magoosh is a renowned online test preparation platform for exams like the GRE, GMAT and TOEFL. When students' anticipated GMAT scores, predicted by Magoosh, differed from their actual results, it sent a wave of concern.    

Their NPS reflected this discrepancy. Instead of turning a blind eye, Magoosh delved deeper.   

Adjusting the predictive algorithm might yield scores that could seem disheartening to students, potentially affecting their motivation.   

Was it then more prudent to maintain the status quo, or risk altering the algorithm?    

Instead of making an abrupt change, Magoosh cleverly altered their feedback approach.   

They refined their prediction algorithm and to gauge its impact, integrated instant feedback mechanisms. By closely monitoring and reacting to their NPS, Magoosh reaffirmed its commitment to its students, ensuring they got the most accurate insights for their upcoming exams.   

Source  

Meanwhile, in the realm of enterprise communication software, Slack's journey with NPS paints another compelling narrative.   

When Bill Macaitis, Slack’s CMO, underscored the significance of NPS, it wasn't just about gauging satisfaction. For Macaitis, the real success was when users turned evangelists, actively promoting Slack. Beyond mere sign-ups or conversions, he knew the critical value of transforming users into brand champions.   

His idea: CEOs should ask why customers would or wouldn't recommend their brand. It was this perspective that refined Slack's approach to customer experience and propelled its market dominance.  

Both Magoosh and Slack illustrate a fundamental truth: NPS isn't just a metric. When interpreted and acted upon with care, it's a catalyst for profound business evolution.  

Ready to take your NPS scores to soaring heights? 

Bring the number and the narrative behind your NPS with Sprinklr Service. You can: -  

• Consolidate feedback from every channel and paint a holistic view of your customers' sentiments.  

• Use Sprinklr to not just tally scores, but reveal the stories, patterns and actionable insights behind them.  

• Understand the "why" as much as the "what" — ensuring that you're always tuned into your customers’ voices. 

And much more. Curious? 

Get a personalized demo and see what could be done to get a better NPS score. 

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