What is Net Promoter Score (NPS)?

While it’s true that some customers, even those who love a company’s products and services, will remain passive customers. A company that cannot generate enthusiasm from its customers will struggle to reach economies of scale. It is a good source of customer feedback that helps companies understand whether customers are truly happy with a company’s products or services or the overall customer experience management.

Companies should deploy net promoter score surveys frequently to establish benchmarks and understand whether changes to the customer experience are improving the score.

Organizations believe it is a good determinant of customer satisfaction. It not only tracks who among an organization’s audience are loyal customers, but also those who help the organization scale through positive word of mouth.

A low score might mean that there are too many detractors, which will hinder the business in scaling up with more customers. It can also track the expected rates of negative word of mouth, given that some people who do not recommend an organization’s products might instead tell people to not buy them.

Developed by Fred Reichheld, software provider Satmetrix and the business consultancy Bain & Company, Inc., NPS asks users who have experienced a touchpoint how likely they are to recommend the company to others. It was introduced in a well-known 2003 Harvard Business Review article “The One Metric You Need to Grow” and has since become an important tool to understand customer relationships.¹

It originated when former Enterprise Car Rentals CEO Andy Taylor shared a case study with an audience. He said the company measured customer loyalty by asking two questions of its customers. Those questions involved how the customers ranked the quality of their experience and whether they would use the company’s services again.

Reichheld built upon that simplicity and created NPS, which asked people whether they would recommend a product or service to their social groups. Bain & Company has evolved the NPS to a Net Promoter System, which it uses to help companies better serve their customers across all aspects of the customer experience.

The NPS methodology is straightforward. Organizations ask customers to rank how likely they would recommend a company’s product or service in an NPS survey. Respondents reply by using a scaled answer, often 1–10.

Different responses mean different things. Companies consider customers who scored 9’s and 10’s to be promoters, 7’s and 8’s are often treated as passives, and 6 or under are seen as detractors.

The Net Promoter Score calculation formula involves subtracting the number of low scores (6 or under) from the number of “promoters” (9’s and 10’s) and the net is converted into a percentage. This percentage can range from -100 (all 6’s or less) to +100 (all 9’s and 10’s). The best performers receive an average NPS score of 80 or better.

Good net promoter scores often demonstrate a customer base with enthusiasm for the company. Companies can use an NPS template or develop their own. Some companies choose to include some open-ended questions to dig deeper into which product features they customers like. Sample survey questions of this nature include asking why people chose their specific NPS score and what a company can do to improve it.

Every industry is slightly different in baseline NPS scores, so it’s important to benchmark against industry norms. A 2024 Retently study² found significant differences between NPS averages across industries. For example, the average NPS for an insurance company is 80, whereas it is 39 for cloud and hosting. Companies that fall below this average should focus on improving the customer experience to better meet customer needs and expectations.

NPS is one of several metrics companies use to gauge customer experience.

A Customer Satisfaction Score (CSAT) calculates the percentage of respondents who claim to be satisfied (4) or very satisfied (5) in surveys.

A Customer Effort Score (CES) determines how easy or difficult customers found accomplishing their goals as it relates to an interaction with a company. Examples might be making a purchase or having an issue resolved. Most CES surveys ask customers to rate the difficulty of completing the action from 1 (easy) to 5 or 7 (difficult).

While all three scores help gauge general customer happiness with a company, they do vary. CES is focused more on a specific action and can be less representative of the individual’s overall satisfaction with a company. CSAT helps understand a customer’s satisfaction, but does not determine whether the individual is likely to recommend the company’s products to their networks. The NPS score

It can be difficult to get customers to complete surveys, even if they do not include have many questions. While companies can conduct NPS surveys at any time during the customer journey, many choose to send transactional NPS surveys, which means they are supplied after a customer made a purchase. Other options that might improve response rates include:

• Email survey
• Onsite pop-ups
• SMS and text messages
• Postcall surveys
• In-person surveys

An ideal approach is to send an email to customers shortly after a purchase or a customer care resolution to get their feedback then.

Reaching logged in customers on companies’ websites is a great way to solicit responses to NPS scores. A pop-up can quickly record answers, and the customer can continue browsing the website.

Companies can send messages to their customers mobile phone to answer NPS questions while on the go.

Customer care representatives can request customers calling in to stay on the line to answer a postcall survey after they resolve the customer’s issue.

Retailers can set up booths or ask people at the checkout line if they might complete a survey to better help the retailer serve their customers in the future.

There are several ways companies can engineer better NPS results.

• Improve omnichannel marketing and support
• Improve customer care
• Provide a better customer experience
• Pay attention to passives
• Conduct root-cause analysis

Companies must reach customers across multiple touchpoints and channels such as their website, mobile devices and social media. Using tools to track and normalize those experiences is a great way to keep customers happy.

Creating and selling amazing products does not matter much if companies do not provide adequate customer support. A poor customer care experience might negatively impact NPS feedback. Therefore, companies should focus on resolving customer issues quickly; they can follow up to see whether the customer has any additional questions or issues. Focusing on the entire customer experience will likely improve NPS.

For example, companies can track how satisfied people are regarding the response time of an organization’s web applications and services through the Apdex score. If it takes a customer can’t access important information on a company’s website, or if an app isn’t working, it influences their NPS score. Even if neither are the actual product produced by the company.

Companies understandably want to turn detractors into promoters, but that can take much work. And some detractors might never turn into passives or promoters. Instead, companies can focus on winning over passives, who then become promoters. This improves the overall NPS, even if the number of detractors stay the same.

Low NPS results likely mean that either the customer experience is not working or the products or services do not fit customer needs.

Organizations use NPS data for several key reasons:

• Understanding business growth and opportunities
• Reducing churn
• Recruiting new customers
• Improving the customer experience

An organization that has a high NPS not only will have high customer retention. It has an army of existing customers effectively creating referrals for the business.

While the survey does not specifically ask people if they would buy a product or service from the organization again, it can help an organization identify whether they have too many unhappy customers and are risk for losing them. A low NPS can indicate that a company is at risk to having increased customer churn.

Ideally, high NPS means that existing customers are out in the marketplace sharing how happy they are with companies’ products and services. This will likely produce some new prospects, who want to experience the benefits they have heard about from their friends or colleagues.

By establishing NPS benchmarks and continually analyzing the NPS data, companies can better understand their existing customer experience. Companies with a poor NPS likely need to revisit how they’re communicating to and serving customers and identify improvements.

Given the specificity of the questions, it does not tell the whole story. Companies might have plenty of happy customers who nonetheless do not intend to tell others about their products and services. That might be an impression that customers are not happy, but that would not be accurate.

It also might not provide actionable insights, unless the organization asks more open-ended follow-up questions. And, for those companies that ask follow-up questions, it can be challenging to analyze all that information. Many turn to sentiment analysis, but that historically struggled with understanding slang and euphemisms. Thankfully, artificial intelligence (AI)-enhanced sentiment analysis can more intelligently understand the full scope of a statement and determine whether it was positive or negative.

Finally, companies might need to send multiple requests to customers to get them to complete the NPS survey. As a result, they might influence more negative scores from respondents who don’t like the company’s aggressive survey tactics. As such, a company should study when and through which medium most responses occur, so they can prioritize that channel.