What is a Net Promoter Score, and how can you calculate yours?

Do you know what percentage of customers are loyal to your brand versus those who are unhappy?

Your net promoter score (NPS) can unlock this information for you if you don’t know where you stand. As a result, you can gather valuable insights and make better decisions on how to improve customer experience (CX).

Companies continue to prioritize NPS over other KPIs in business strategy.

Lumoa conducted research with over 100 CX directors. 64.5% of directors said their businesses use NPS. Meanwhile, only 43.6% report that they measure customer satisfaction (CSAT), 42.7% measure churn rate, 35.5% measure retention rate, and 28.2% measure customer lifetime value (CLV).

Keep reading for more insight into the NPS metric, including what it is, how to measure yours, and the key benefits to expect.

Businesses use the net promoter score metric to uncover the numerical ratings of the likelihood of respondents recommending their brand to someone else. This translates to the likelihood of business growth. Results stem from a series of questions answered on a 0–10 scale.

Use this formula to calculate your NPS:

Percentage of promoters - percentage of detractors = NPS

Try out our NPS calculator

Interpreting your results

Your respondents will fall into one of the following three categories based on their individual scores:

1. Detractors (0–6): Detractors are your unhappiest customers. Their experiences with your brand need to improve because they are at risk of turning to your competitors. They highlight where you need to implement improvements.

2. Passives (7–8): Passives are not your happiest customers, but they are not your unhappiest customers either. They can be persuaded in either direction depending on your actions moving forward.

3. Promoters (9–10): Your promoters are your most enthusiastic and satisfied customers. They are willing to recommend your company and purchase from you again. This is your ultimate response goal.

Your NPS itself will range from -100 to 100.

Any score above 0 is considered a good score. This means you have more loyal enthusiasts than detractors. Anything lower than 0 indicates a strong need for change.

Industry leaders often receive an average score of 70. However, no business has managed to achieve a score of 100.

How to collect results

The most common channels for running surveys and collecting NPS feedback from customers are email and company websites.

Website surveys allow you to capture feedback during your customer’s experience. An example would be an exit survey that asks, “On a scale of 0–10, how likely are you to recommend [your brand] to a friend or colleague?”

Email surveys are great for capturing feedback after the fact. For instance, many brands like to use email surveys to target recipients who have recently purchased a product.

There can be a time delay between creating and delivering email surveys, which extends the time between a customer’s initial experience with you and their responses. However, during this period, your customer will have had time to familiarize themselves with your product or service. This offers a unique opportunity to dive deeper into your customer’s experiences and views.

Businesses in different locations and industries use a net promoter score to measure the likelihood of their customers recommending their products or services to friends and family.

It has also become popular for brands to use NPS to gauge how likely their employees are to refer or recommend their business to other potential employees.

Reported talent shortages are at a 16-year high. Since employee referrals count for 30–40% of all hires in the US, any insight into how to improve employee experience will be key to overcoming current and future challenges.

NPS is a key metric for evaluating your customer’s experience and satisfaction with your business.

It’s important to track and measure your NPS for the following reasons:

Determines customer loyalty

Happy customers are loyal customers. A high NPS score is a great indicator of customer loyalty and means you’re doing something right.

However, you’ll need to pay extra attention to customers that score lower (particularly in the 0–6 range) if you want them to become brand promoters.

NPS identifies where you stand so you can make important changes before it’s too late.

Highlights areas that need improving

Henry Ford once said, “Businesses that grow by development and improvement do not die. But when a business ceases to be creative, when it believes it has reached perfection and needs to do nothing but produce no improvement, no development, it is done.”

NPS highlights what percentage of customers like your brand enough to recommend it and what percentage are in danger of leaving. More importantly, it highlights the “why” behind your customers’ answers so you can improve their future experiences and strengthen relationships with them.

Optimizes your referral marketing

Your NPS can inform valuable changes within your business to encourage more customers to recommend your product or service.

Taking the right steps can boost your referral marketing efforts and allow you to benefit from 3–5 times higher conversion rates. You could improve your marketing effectiveness by 54%.

Studies show that happy customers share their positive experiences with nine people on average, while dissatisfied customers tell 16 people or more about their negative experiences.

Helps you locate and prioritize detractors

A typical customer satisfaction survey like NPS reveals valuable insights and informs employees which areas they should focus on to create a more exceptional customer experience.

Identifying detractors also gives your team a unique opportunity to improve those individuals’ perceptions of your brand by addressing the issues they bring to light.

The biggest difference between measuring NPS and CSAT is the length of evaluation. NPS measures long-term customer loyalty and satisfaction, while CSAT focuses on short-term impressions.

A transactional net promoter score program (tNPS) measures a customer’s loyalty and satisfaction after a specific experience. For example, this might be during a purchase, while visiting your website, or right after an interaction with your brand.

On the other hand, a relational net promoter score program (nNPS) expands your view to a more holistic understanding of respondents. It gives you insight into how they feel about your brand as a whole as opposed to how they felt after one incident.

You can include several types of questions in your NPS survey.

We’ve already mentioned that your main NPS question will look something like this: “On a scale of 0 to 10, how likely are you to recommend [your brand] to a friend or colleague?” However, you can also ask open-ended questions. These expand your opportunities to locate risks (promoters becoming detractors) and opportunities (detractors becoming promoters).

In addition to your NPS question, you may also decide to add the following types of questions:

Demographic questions

Demographic questions would appear at the very beginning of your survey. These are questions about your respondent’s age, profession, race, sex, marital status, and more.

You can add these questions to your survey if you need more demographic data about your audience or you practice customer segmentation.

The fewer questions, the better. Academic studies report that shorter surveys produce higher response and completion rates than longer ones.

Ways to improve

To inform the steps you take to improve products, services, and customer experience, questions like, “How can we make the experience better?” can be the most helpful. A question like this would typically be open-ended.

Uncovering the “why?”

Uncover the reason behind your customer’s scores by asking additional questions like, “Why did you give this score?” Again, this would be in the form of an open-ended question.

Permission to follow up

Asking permission to follow up with respondents is good practice. Doing this gets you their email address (if you don’t already have it) and paves the way for you to close the loop with customers and gain more insight into their responses.

One way you can do this is by thanking them for their participation and asking, “Would you be happy for us to reach out and follow up on your responses?”

Follow-up may be in the form of a one-to-one interview or focus group discussion with other customers.

When it’s time to read your NPS results and evaluate your brand’s position in the market, consider the following three tips:

1. Leverage segmentation systems when you’re comfortable

It’s completely normal to hold off on segmenting your customer base when you are first getting comfortable with NPS. Any insight into your customers and their likelihood of recommending your brand will help you understand what you’re doing right versus what you’re doing wrong.

That said, your results can vary dramatically between segments (such as demographics, location, and psychographics). Analysis via segmentation systems can provide a more holistic view of your customer base.

Moreover, segmentation can inform your actions and decisions moving forward as you adapt your efforts and approaches to meet the needs of different types of customer groups.

2. Context is key: go beyond your follow-up questions

Although the answers you receive on the rating scale will go a long way in expanding your understanding of your target audience, open-ended feedback and follow-up questions tell you why your customers feel how they do.

Asking permission to follow up with respondents will give you a more holistic view of your customers and their responses.

You can follow up by asking more specific questions. Or, you might schedule a follow-up session or even a one-to-one interview. Either method or a combination of them will build context and maximize your consumer insights.

3. Always track and monitor your performance

A benefit of a real-time metric like NPS is that you can check your survey and response rates as often as you like—even daily. You’ll be able to derive insights over time as the score presents patterns and fluctuations.

Tracking and monitoring performance over an extended period is crucial to informing future surveys and identifying key opportunities and areas to improve.