What is NPS?
NPS stands for Net Promoter Score and is a calculation of all the different internal ratings of 1-10 that are received from the submissions of customers. This score provides you a good sense of how your customers view your business and how likely they are to refer you to someone else.
Net Promoter Score (NPS) is a key metric used to measure customer satisfaction and loyalty. It provides actionable insights into how customers perceive your product or service.
This is an example of how the NPS question is asked in the customer experience.
NPS categorizes scores into three groups: Promoters (9-10), Passives (7-8), and Detractors (0-6). This breakdown helps businesses understand customer satisfaction at a granular level.
NPS is calculated using a simple formula: NPS = (% Promoters) - (% Detractors).
NPS ranges from -100% to 100%, where higher scores represent greater customer loyalty.
All NPS ratings given to an employee give them an understanding of how the customers they serve view their work.
The accumulation of all internal ratings received provide the company their NPS score.
Here is how NPS is calculated
To calculate NPS, you will need to follow these steps:
Here’s a step-by-step example to highlight the process: Imagine you have received reviews from 20 customers.
19 Promoters (scores of 9 or 10)
1 Passive (score of 8)
0 Detractors (scores 0-6) Now calculate each component:
% Promoters = (19 ÷ 20) × 100 = 95%
% Detractors = (0 ÷ 20) × 100 = 0% Apply the NPS formula: NPS = 95% – 0% = 95%. Note that Passives are excluded.
For example, if you received 100 responses and 50 were Promoters, 30 were Passives, and 20 were Detractors, your NPS score would be 30 (50% - 20%). This means that your company has a higher percentage of satisfied and loyal customers.
While Promoter and Detractor scores directly affect NPS, Passive scores do not. This can lead to confusion when only visible feedback is considered, as NPS excludes 7-8 scores in the computation.
NPS is a valuable metric for businesses as it can help identify areas for improvement and measure customer satisfaction over time. It is also a useful tool for benchmarking against competitors and setting goals for customer satisfaction and loyalty.
To correctly interpret your NPS, focus on the scores of Promoters and Detractors exclusively. While Passives do not influence the score, they may still offer valuable feedback when analyzing overall customer satisfaction.
Now that you know how to calculate NPS, you can start using this metric to improve your customer experience and grow your business.
NPS = (Number of Promoter Scores ÷ Total Number of Respondents) − (Number of Detractor Scores ÷ Total Number of Respondents)