Net Promoter Score
Growth
Retention
Industry:
Sector Agnostic
Short Definition
Net Promoter Score (NPS) is a widely used metric that measures customer loyalty, satisfaction, and enthusiasm with a company or product. It is calculated based on customer responses to a single question, typically "How likely are you to recommend us?" on a scale from 0 to 10, and ranges from -100 to +100.
Short Definition
Net Promoter Score (NPS) is a widely used metric that measures customer loyalty, satisfaction, and enthusiasm with a company or product. It is calculated based on customer responses to a single question, typically "How likely are you to recommend us?" on a scale from 0 to 10, and ranges from -100 to +100.
Short Definition
Net Promoter Score (NPS) is a widely used metric that measures customer loyalty, satisfaction, and enthusiasm with a company or product. It is calculated based on customer responses to a single question, typically "How likely are you to recommend us?" on a scale from 0 to 10, and ranges from -100 to +100.
Why it matters for Investors
Customer loyalty: High NPS indicates strong customer advocacy, driving organic growth.
Revenue impact: Correlates with retention and referrals, influencing long-term revenue.
Risk assessment: Low NPS may signal customer dissatisfaction, affecting valuation and growth prospects.
Why it matters for Investors
Customer loyalty: High NPS indicates strong customer advocacy, driving organic growth.
Revenue impact: Correlates with retention and referrals, influencing long-term revenue.
Risk assessment: Low NPS may signal customer dissatisfaction, affecting valuation and growth prospects.
Why it matters for Investors
Customer loyalty: High NPS indicates strong customer advocacy, driving organic growth.
Revenue impact: Correlates with retention and referrals, influencing long-term revenue.
Risk assessment: Low NPS may signal customer dissatisfaction, affecting valuation and growth prospects.
Formula
Practical considerations -
Response scope: Include responses to the likelihood-to-recommend question on a scale from 0 to 10, categorizing respondents as Promoters (9-10), Passives (7-8), and Detractors (0-6).
Timeframe alignment: Calculate NPS over a consistent period (e.g., monthly, quarterly) based on survey data collection.
Definition clarity: Ensure consistency in defining the survey population and response weighting across reports.
Policy clarity: Document how incomplete surveys, non-responders, or segmented data are handled in the NPS calculation.
Formula
Practical considerations -
Response scope: Include responses to the likelihood-to-recommend question on a scale from 0 to 10, categorizing respondents as Promoters (9-10), Passives (7-8), and Detractors (0-6).
Timeframe alignment: Calculate NPS over a consistent period (e.g., monthly, quarterly) based on survey data collection.
Definition clarity: Ensure consistency in defining the survey population and response weighting across reports.
Policy clarity: Document how incomplete surveys, non-responders, or segmented data are handled in the NPS calculation.
Formula
Practical considerations -
Response scope: Include responses to the likelihood-to-recommend question on a scale from 0 to 10, categorizing respondents as Promoters (9-10), Passives (7-8), and Detractors (0-6).
Timeframe alignment: Calculate NPS over a consistent period (e.g., monthly, quarterly) based on survey data collection.
Definition clarity: Ensure consistency in defining the survey population and response weighting across reports.
Policy clarity: Document how incomplete surveys, non-responders, or segmented data are handled in the NPS calculation.
Worked Example
Line item | Amount | Notes |
|---|---|---|
Number of Promoters | 60 | Customers rating 9-10 |
Number of Detractors | 20 | Customers rating 0-6 |
Total Respondents | 100 | Total survey participants |
NPS | 40 | (60% - 20%) |
Notes:
Excludes 10 non-responders, per policy.
Includes 5 Passives (7-8) in total but not in NPS calculation, per policy.
Worked Example
Line item | Amount | Notes |
|---|---|---|
Number of Promoters | 60 | Customers rating 9-10 |
Number of Detractors | 20 | Customers rating 0-6 |
Total Respondents | 100 | Total survey participants |
NPS | 40 | (60% - 20%) |
Notes:
Excludes 10 non-responders, per policy.
Includes 5 Passives (7-8) in total but not in NPS calculation, per policy.
Worked Example
Line item | Amount | Notes |
|---|---|---|
Number of Promoters | 60 | Customers rating 9-10 |
Number of Detractors | 20 | Customers rating 0-6 |
Total Respondents | 100 | Total survey participants |
NPS | 40 | (60% - 20%) |
Notes:
Excludes 10 non-responders, per policy.
Includes 5 Passives (7-8) in total but not in NPS calculation, per policy.
Best Practices
Accurate surveying: Use standardized NPS surveys to collect reliable data.
Regular updates: Recalculate NPS with each survey cycle or customer feedback period.
Segmentation: Analyze NPS by product, region, or customer segment to identify trends.
Transparency: Disclose NPS calculation methods, including exclusions, in customer reports.
Actionable insights: Use NPS to drive improvements in customer experience and retention.
Best Practices
Accurate surveying: Use standardized NPS surveys to collect reliable data.
Regular updates: Recalculate NPS with each survey cycle or customer feedback period.
Segmentation: Analyze NPS by product, region, or customer segment to identify trends.
Transparency: Disclose NPS calculation methods, including exclusions, in customer reports.
Actionable insights: Use NPS to drive improvements in customer experience and retention.
Best Practices
Accurate surveying: Use standardized NPS surveys to collect reliable data.
Regular updates: Recalculate NPS with each survey cycle or customer feedback period.
Segmentation: Analyze NPS by product, region, or customer segment to identify trends.
Transparency: Disclose NPS calculation methods, including exclusions, in customer reports.
Actionable insights: Use NPS to drive improvements in customer experience and retention.
FAQs
What is included in NPS?
The difference between the percentage of Promoters and Detractors, adjusted per policy.Can NPS be negative?
Yes, if Detractors outnumber Promoters.How are Passives handled?
Excluded from the NPS calculation, per policy.Is it the same as Customer Satisfaction Score (CSAT)?
No, NPS measures loyalty, while CSAT measures satisfaction on a broader scale.What if a survey is incomplete?
Exclude from the count, per policy.
FAQs
What is included in NPS?
The difference between the percentage of Promoters and Detractors, adjusted per policy.Can NPS be negative?
Yes, if Detractors outnumber Promoters.How are Passives handled?
Excluded from the NPS calculation, per policy.Is it the same as Customer Satisfaction Score (CSAT)?
No, NPS measures loyalty, while CSAT measures satisfaction on a broader scale.What if a survey is incomplete?
Exclude from the count, per policy.
FAQs
What is included in NPS?
The difference between the percentage of Promoters and Detractors, adjusted per policy.Can NPS be negative?
Yes, if Detractors outnumber Promoters.How are Passives handled?
Excluded from the NPS calculation, per policy.Is it the same as Customer Satisfaction Score (CSAT)?
No, NPS measures loyalty, while CSAT measures satisfaction on a broader scale.What if a survey is incomplete?
Exclude from the count, per policy.
Related Metrics
Parents / Source metrics: Number of Promoters, Number of Detractors
Children / Components: Promoter Score, Detractor Score
Commonly mistaken for:
CSAT: Focuses on satisfaction, not recommendation.
Customer Effort Score (CES): Measures ease, not loyalty.
Churn Rate: Measures loss, not sentiment.
Related Metrics
Parents / Source metrics: Number of Promoters, Number of Detractors
Children / Components: Promoter Score, Detractor Score
Commonly mistaken for:
CSAT: Focuses on satisfaction, not recommendation.
Customer Effort Score (CES): Measures ease, not loyalty.
Churn Rate: Measures loss, not sentiment.
Related Metrics
Parents / Source metrics: Number of Promoters, Number of Detractors
Children / Components: Promoter Score, Detractor Score
Commonly mistaken for:
CSAT: Focuses on satisfaction, not recommendation.
Customer Effort Score (CES): Measures ease, not loyalty.
Churn Rate: Measures loss, not sentiment.
Index