Net Promoter Score (NPS): Meaning, Question, Calculation and Benchmark
- Updated on December 7, 2020
- 7 min read
13 years of experience in online marketing
What is a Net Promoter Score?
A Net Promoter Score, or NPS, is a marketing tool used to measure people’s loyalty towards a company or a brand and their willingness to recommend the company’s or brand’s products to other people. NPS surveys are widely used to measure an employee’s loyalty and they are also an important instrument to estimate the company’s revenue growth potential.
Net Promoter Score Survey Question
The simplest Net Promoter Score survey may consist of just one question. The standard NPS question is:
How likely is it that you would recommend our company/product/service to a friend or colleague?
The scoring of the NPS scale lays between 0 and 10:
0 - not likely at all, 10 - extremely likely
It’s important that the Net Promoter Score scale has exactly 11 points. The requirement is laid by the way the responses are processed and the score is calculated.
Depending on the depth of your research, you may add more questions to your NPS survey, for example, asking why your customers gave that particular score and how you can improve, but be sure to keep your NPS scale precisely between 0 to 10, as otherwise it will lose its initial NPS meaning and become a common Rating scale.
Below you will find an example of an NPS survey that we’ve created for illustration purposes in the AidaForm survey maker. The template employs smart jumps, allowing you to address your respondents differently depending on their scoring. You can use the template to create your own NPS form and start collecting valuable marketing information today.
Net Promoter Score Calculation
Depending on the given score, all respondents can be divided into three groups: Promoters, Passives, Detractors.
|Promoters||9 - 10||These are your most loyal customers, ready to promote your products, participate in your company's forums, and help other customers to implement and use your products more effectively|
|Passives||7 - 8||These customers are loyal, but not enthusiastic about your products. They may be equally converted into Promoters or Detractors. Working with the group is especially important when the number of people in the group is relatively high.|
|Detractors||0 - 6||These people are unlikely to promote your product; in fact, they are very likely to give it a negative review. They are very often unsatisfied customers who are very sensitive to competitive offers.|
Net Promoter Score Formula
To calculate NPS, you need to count the number of Promoters, the number of Detractors and the amount of customers who participated in your survey. The customers who turned out to be Passives are not taken into account when calculating the Net Promoter Score. The NPS calculation formula is:
Let’s review the example showing how to calculate NPS using the formula above:
Supposing, 200 people answered your Net Promoter Score question. We have divided them into groups accordingly and now we need to make calculations for the % of Promoters and the % of Detractors.
Promoters: 20 people gave scores of 9 and 10.
The % of Promoters = 20⁄200*100% = 10%
Passives: 50 people gave scores of 7 and 8. Put them aside for now.
Detractors: 130 people gave a score between 0 and 6.
The % of Detractors = 130⁄200*100% = 65%
Net Promoter Score (NPS) = 10% - 65%= - 55%
Net Promoter Score range and meaning
How can we interpret the result? Is NPS = -55 OK or does it demand urgent improvements?
Theoretically, the Net Promoter Score range may differ from -100 when all respondents fall into the Detractors group to +100 when all respondents fall into the Promoters group. In reality, most companies never reach the extreme values.
Given that the purpose of NPS is to calculate the probability with which your client or employee will promote your brand or give a negative review and stop using your product, the NPS score of -55 cannot be considered satisfactory at all. The score is a red flag indicating the need for rapid improvements.
At this point, we would once again like to highlight the importance of using the 11 point scale to collect NPS data. When Fred Reichheld developed the NPS research model in 2003, he outlined the reasons his team chose the 0 to 10 scale. Along with being “appropriate to group users into groups that deserve different focus” and intuitive, the scale must provide a statistically meaningful result.
So, what statistical difference does it make to the Net Promoter Score if you decide to use a 1-5 scale instead of a 0-10 scale? The shorter the scale, the higher the percentage of points on it are booked for positive scoring. Your scale stops appropriately distributing your customers into groups according to their focus, and your NPS score doubles. This means your NPS result is likely to be positively biased.
What is a Good Net Promoter Score? NPS Benchmarks
NPS global standards treat +50 as ‘excellent’ and +70 as ‘world class.’ Any NPS that is above 0 is considered to be ‘good,’ as this means that the number of loyal customers is higher than the number of disloyal customers. Always compare the NPS you’ve got against your previous score and NPS scores of companies with which you compete. Competitive benchmarks may vary drastically depending on the industry. Knowing what similar companies have achieved helps you to set realistic goals for improvement.
Here’s some 2019 NPS benchmarking data provided by satmetrix.com.
Average Net Promoter Score benchmarks by industry:
|Software and Apps||30|
NPS Scores of companies - leaders by industry:
|Smartphones||Apple and Samsung||45|
Tips and Tricks from Growth Hacking Specialists
NPS surveys are often mixed up with Customer Satisfaction Surveys. It’s important to differentiate these two types of research because they actually measure different notions. Even the most eager evangelists for your company may not be completely satisfied with your products and may provide valuable feedback on how to improve them.
When conducting NPS surveys, use additional open-ended questions and ask your respondents about the reasons for giving this or that score.
The question you can ask your Promoters is:
‘That’s great to hear. Can you tell us why you gave this score?’
And you may address your Detractors in the following way:
‘We are sorry to hear that. Can you tell us why you gave this score?’
Many start-up companies try to use the Net Promoter Score to draw a conclusion as to whether they have developed a product that is in demand on the market. Sean Ellis, a co-author of the ‘Hacking Growth’ bestseller, advises start-ups to use a different question for this purpose. In his opinion, to measure the level of demand for a young, developing product, it’s more suitable to ask: ‘how would you feel if you could no longer use our product tomorrow?’ The predefined answers are ‘very disappointed,’ ‘somewhat disappointed,’ ‘not disappointed’ or ‘I don’t use this anymore.’
According to the research Sean has conducted on more than 100 start-ups, when less than 40 percent of the respondents are ‘very disappointed,’ the start-up may face problems with growth. Start-ups with 40 percent and higher have good growth potential.
Would You Like to Create Your Own NPS or Custom Satisfaction Survey?
AidaForm is a cloud-based service that allows you to create any type of online survey and poll within several minutes, without coding. Use it as Net Promoter Score software and more. AidaForm features a wide variety of fields and ready-made templates to use in your feedback, customer satisfaction and customer development research.
Сreate your account and start your first surveys today!