What Is Net Promoter Score? Definition & How to Calculate It

Knowing how satisfied customers are with your business can be the key to continued growth. One of the most effective ways to find out is by using the Net Promoter Score (NPS). NPS is an important metric for measuring customer loyalty.

Knowing your NPS score helps you understand how strong the relationship between your business and your customers is. The higher the score, the greater the chance that customers will become loyal promoters. Let's learn more about the benefits and how to calculate NPS in this article!

What Is Net Promoter Score (NPS)?

The Net Promoter Score (NPS) is a metric that measures customer loyalty to a product, service, or brand.

Simply put, NPS shows how likely a customer is to recommend your business to others. This score is obtained through a short survey that asks several questions with answers on a scale of 0 to 10.

The concept of NPS was first introduced by Fred Reichheld in a Harvard Business Review article in 2003. Today, NPS remains one of the key indicators for assessing customer experience.

Why Is NPS Important for Businesses?

Net Promoter Score (NPS) is important to understand because it helps businesses know the extent to which customers are satisfied and loyal to the products or services your business offers.

By regularly monitoring NPS, you can assess whether customers are likely to recommend your business or are potentially switching to competitors.

A high NPS score indicates that customers are satisfied and are potentially able to become promoters who voluntarily recommend your business to others.

Conversely, a low NPS score can be an important signal that there are aspects of service or products that need to be improved immediately to maintain the positive customer experience.

Read also: Customer Loyalty: Definition, Indicators, and How to Increase It

NPS Formula and Calculation Method

To calculate the NPS score, the first step is to collect customer responses through a survey with a 0–10 rating scale. The NPS score is a number that indicates the level of consumer loyalty to a business, product, or service.

Then, based on all the scores collected during the survey, customers will be categorized into three groups, including:

• Promoters (scores 9–10): Customers who are very satisfied, loyal, and likely to recommend your business to others.
• Passives (scores 7–8): Customers who are fairly satisfied but do not yet have strong loyalty, making them likely to switch to competitors.
• Detractors (scores 0–6): Customers who are dissatisfied and likely to spread negative experiences about your business.

 

Once all the data has been collected, use the following NPS formula to calculate the score:

NPS = (% Promoters) − (% Detractors)

Calculation example:

Assuming you have 200 respondents with 120 promoters, 50 passives, and 30 detractors. Then:

• Promoter Percentage = (120 ÷ 200) × 100 = 60%
• Detractor Percentage = (30 ÷ 200) × 100 = 15%
• NPS = 60% − 15% = 45%

From the above calculation, your business's NPS score is 45. An NPS score of 45 indicates that your business has a fairly loyal customer base. The majority of customers are satisfied with the experience provided during their interactions with your business.

The Differences Between NPS, CSAT, and CES

Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), and Customer Effort Score (CES) are all used to measure customer experience. However, these three metrics have different focuses and purposes. Here is the explanation:

1. Net Promoter Score (NPS)

Essentially, NPS is used to measure customer loyalty to your business. The question focuses on how likely customers are to recommend your business to others. NPS helps assess the long-term relationship between customers and the brand.

2. Customer Satisfaction Score (CSAT)

Customer Satisfaction Score (CSAT) measures customer satisfaction with a specific experience, such as a transaction, customer service, or product quality. CSAT results provide a direct picture of satisfaction at a particular moment.

3. Customer Effort Score (CES)

Customer Effort Score (CES) assesses the ease with which customers interact with a business. For example, when seeking help or resolving issues. CES results help businesses identify obstacles that customers may encounter.

Read also: Referral Marketing: Definition, Types, and Examples

Sample Questions for NPS Surveys

Here are some examples of NPS survey questions you can use to measure customer loyalty:

• “How likely are you to recommend our products and services to your family or coworkers?”
• “What is the main reason you gave that score?”
• “What do you like most about our products or services?”
• “Which part of your experience do you think we could improve?”
• “What can we do to make you more satisfied in the future?”

 

The main question is simply how likely customers are to recommend your business. The additional questions help you understand the reasons behind the scores given by customers and facilitate analysis for improvement.

Examples of NPS Application in Businesses

Here are some examples of Net Promoter Score (NPS) applications in businesses from various sectors:

1. E-Commerce Companies

Online shopping platforms use NPS to determine customer satisfaction levels after completing transactions. For example, after making a purchase, customers are asked to rate how likely they are to recommend the store.

2. Service Companies (Banks, Insurance, or Telecommunications)

Service companies can send NPS surveys after customers use certain services, such as opening a new account or filing a claim. The scores obtained serve as a reference for improving service, response time, or communication systems to enhance the customer experience.

3. SaaS (Software as a Service) Business

Software companies often use NPS to evaluate user experience with their products. For example, after users try a new feature, the system displays a short survey to assess how likely they are to recommend the application.

That is an explanation of net promoter score, from its definition and calculation method to its benefits for businesses in understanding customer loyalty levels. Although it seems simple, maintaining customer satisfaction and loyalty is not easy. It requires a consistent, measurable marketing strategy that aligns with your audience's behavior.

If you are still confused about how to optimize your digital strategy to align with your net promoter score results and business goals, do not hesitate to ask for professional help. In this case, you can trust the All-in-One Digital Marketing service by cmlabs!

As an all-in-one digital marketing partner, cmlabs is ready to help you develop data-driven strategies to enhance customer loyalty and business performance. From SEO and SEM to content writing, our expert team will ensure every step of your marketing runs effectively and hits the target.

Want to know how cmlabs can help you build the right digital strategy to strengthen customer satisfaction and loyalty? Contact our team now and experience the impact!

Read also: 8 Customer Satisfaction Indicators and How to Measure Them