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What is Net Promoter Score® (NPS®) and How Do I Measure It?

Written by James Charles.

A brief explanation of the Net Promoter Score® (NPS®) concept and how to use it to measure customer loyalty in your business.

 

What is Net Promoter Score®?

NPS®, formally known as ‘Net Promoter Score’, is a widely recognised way of assessing the loyalty of an individual or group of customers. Using just one simple question, Net Promoter Score allows you to gauge how likely someone is to recommend your business to a friend, family member or colleague.

 

How Do I Measure My Business’ Net Promoter Score?

The NPS Question

To discover an individual’s Net Promoter Score you ask them the following question:

Perfect Fit Health Clubs NPS® Question(please note: Perfect Fit Health Clubs is a made-up chain of gyms purely for demonstrative purposes)

The customer gives a score from 0 to 10, with 0 not at all likely and 10 extremely likely to recommend.Perfect Fit Health Clubs Net Promoter Score®

It is best practice to follow the NPS question with a ‘why?’ question, to help establish the reason behind the score and how to go about improving it (if it is not already a 10!) – It is also a great way to gain valuable testimonials about why people are such fans of your business, for use in your marketing messaging!

 

Detractors, Passives and Promoters

The score that the respondent gives will dictate which NPS category they are placed in.

Detractors

Customers giving a score between 0 and 6 (inclusive) are called Detractors.

Not particularly impressed with your offering, Detractors are unlikely to recommend you to a friend, colleague or family member. In fact, based on their perceived bad experience/s, they are more likely to warn people not to do business with you.

Passives

Customers giving a score of 7 or 8 are called Passives.

Passives are best described as ‘sitting on the fence’, they are indifferent to your service and an experience could quite easily move them up or down the Net Promoter® scale.

Promoters

Customers giving a score of 9 or 10 are called Promoters.

Promoters are great! They are the raving fans of your business and can’t wait to tell everyone and anyone how great you are. They are like a giant sales force that you do not have to pay!  The more Promoters you have the better, as we shall see when calculating organisational NPS, below.

 

The NPS Equation

To calculate your business or departmental NPS you need to look at the proportion of customers who fall into the categories of being a Detractor or a Promoter.

(Passives are consciously left out of the calculation)

The NPS equation is as follows:

% Promoters% Detractors = NPS

(simple!)

So, for example:

NPS Category Number of Customers Percentage of Overall
Promoters 1800 60%
Passives 300 10%
Detractors 900 30%


60%30% = 30

NPS = 30

Your goal should be to move as many of your customers as possible up the Net Promoter scale, using the data generated by asking the Net Promoter Score question to efficiently and effectively inform service delivery improvements.

The higher your NPS the better.

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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.

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