Net Promoter Score (NPS)

An NPS survey is very simple. In order to obtain customer feedback, the question about whether the customer would recommend to others is placed at as many touch­points as possible. Customers usually answer by rating the question from 0 to 10.

The customer sat­is­fac­tion can refer to an in­di­vidu­al product or service, to a brand, or a company as a whole.

Here is an example:

The owner of the bike store, Wheels4U, wants to find out how satisfied customers are with his business. He asks the question “How likely is it that you would recommend the company/product/service to a friend or colleague?” to every customer that buys one of his bicycles, brings one in to be repaired, or asks for advice. The customers give their answer in the form of a ques­tion­naire that contains a rating scale of 0 to 10.

Al­tern­at­ively, he could just measure customer sat­is­fac­tion sep­ar­ately for each product or service offered.

In order to analyze the NPS survey, the surveyed customers are divided into three groups depending on their answer.

• 9–10: Customers who indicate their will­ing­ness to recommend with 9 or 10 are con­sidered “promoters”
• 7–8: All answers of 7 or 8 are con­sidered in­dif­fer­ent
• 0–6: Customers who give a score of 0 to 6 are con­sidered “de­tract­ors” (critics)

The Net Promoter Score is then cal­cu­lated using the following formula:

NPS = Per­cent­age of all promoters - per­cent­age of all de­tract­ors

The result will be a value between +100% and -100%.

Due to its sim­pli­city, the NPS is a popular tool for obtaining customer feedback on a broad basis. However, it is only used to access overall customer sat­is­fac­tion. The NPS alone says little about customer loyalty. Companies that use the Net Promoter Score receive an index that shows customer sat­is­fac­tion and can be compared with the general bench­marks. Business owners learn nothing about the re­la­tion­ship between cause and effect – the influence of company per­form­ance on customer attitudes.

According to critics, the NPS therefore misses the mark. There are numerous methods that can be used to map customer sat­is­fac­tion as an index – in some cases even with a stronger cor­rel­a­tion to company growth. The one used basically plays a sub­or­din­ate role when it comes to identi­fy­ing room for maneuver for op­tim­iz­a­tion.

Reichheld therefore re­com­mends NPS users to get customers to elaborate on their rating by asking why they gave that par­tic­u­lar rating. Only those who know why customers become promoters or de­tract­ors can identify op­por­tun­it­ies and obstacles and initiate the right measures to improve their offering.

However, while a rating on the NPS scale enables simple, automatic analysis, it isn’t the same with answers to these open questions. Open questions always leave room for in­ter­pret­a­tion – re­gard­less of whether they are analyzed manually or by a computer. Reichheld doesn’t reveal how answers can be analyzed without being biased and with as little effort as possible. As a com­prom­ise, companies often add questions with rating scales or pre­defined answer options to the NPS.

In order to get as much as possible out of the collected data, business owners who have de­term­ined customer sat­is­fac­tion via NPS would have to approach de­tract­ors spe­cific­ally in order to win them over. Promoters, on the other hand, can serve as reference customers if required. The pre­requis­ite for this is direct contact with the customers. However, this is usually only possible if the surveys are not carried out an­onym­ously. However, this usually reduces the will­ing­ness to par­ti­cip­ate.