Definitive Guide to Net Promoter Score ( NPS)

NPS is a benchmarking tool for customer satisfaction. The NPS method, which is based on a two-minute survey, gives insights about customer loyalty by measuring customers’ willingness to recommend a business to a friend or acquaintance.

NPS differs from other related benchmarks, such as the customer satisfaction score, by indicating a customer’s general sentiment about a brand as opposed to their opinion on particular interactions or purchases. Because of this, it crops up frequently in discussions about customer experience.

In addition, net promoter score is a standard benchmark used by companies worldwide. This makes it a good way for businesses to gauge their performance as compared to their competitors.

As mentioned earlier, the NPS methodology is primarily intended to measure customer loyalty to a company or brand - in other words, how likely they are to buy again, act as a brand ambassador and resist pressure to defect. This last point can also be expressed as “churn rate” - that is, the likelihood of them cancelling a subscription or not repurchasing. This is important because it is cheaper to retain a customer than acquire a new one.

There are a number of ways in which measuring NPS can be beneficial for your company.

1. Closing the feedback loop: The net promoter system gives companies a chance to “close the loop” - that is, to go vertical and gather more information from respondents. It also gives them chance to change a negative impression. Since an NPS survey only takes a minute of a customer’s time, it’s relatively easy to get them to engage.


2. Easy to use: You don’t need to be a trained statistician to administer an online NPS poll. In a similar vein, the survey is intuitive and simple for customers to complete. You can send it to them via email or include it on your website as a pop-up after a transaction. The formula can be calculated with a basic spreadsheet.


3. A common language for the customer conversation: By breaking down customers down into promoters, passives and detractors, the NPS system makes it easy to differentiate between them. Everyone in the company has a common set of definitions to work with


4. Easier benchmarking: NPS is a standard metric used by companies globally. As such, it lets you place your score in the context of other scores in your industry and see how you measure up. NPS is also ideal for presenting to senior management as a big-picture snapshot of customer loyalty at a given moment.


5. Driving growth: When companies take on the NPS question and begin to study it as a key metric, it helps them channel their customer service efforts and grow revenue through referrals and upsells. This is covered in more detail later in the article.

What is a “good” net promoter score? To answer this question, it’s important to understand that there isn’t one “holy grail” number to strive for. The results vary highly from industry to industry.

Technically, any score above 0 can be considered a “good” score, since it means you have more promoters than detractors. According to global NPS standards, a score of above 50 is good, and above 70 is outstanding. However, both of these scores are rare.

A good way to use NPS is to look at the score of a close competitor and see how yours matches up.

However, it’s equally as important to look at the scores for your industry as a whole. In many sectors, a score in the 30s or 40s is something to aspire to. The average score for department and speciality stores (58) is higher than for airlines (35), which in turn is higher than for internet service providers (2).

If your score indicates that you are having more success with customer relationships than industry competitors, you can reasonably assume that your customers will stick around.