In This Article

  1. Introduction
  2. How to Calculate NPS
  3. The Three Categories
  4. NPS Benchmarks
  5. Using NPS Effectively
  6. Limitations
  7. Conclusion

Introduction

Net Promoter Score (NPS), developed by Fred Reichheld at Bain & Company in 2003, measures customer loyalty with a single question. It has become one of the most widely used metrics for customer experience and is correlated with business growth.

How to Calculate NPS

The Question

"On a scale of 0-10, how likely are you to recommend [company/product] to a friend or colleague?"

NPS = % Promoters - % Detractors

Score ranges from -100 to +100

Example

100 responses: 50 Promoters, 30 Passives, 20 Detractors

NPS = 50% - 20% = +30

The Three Categories

CategoryScoreBehavior
Promoters9-10Loyal enthusiasts, refer others, drive growth
Passives7-8Satisfied but unenthusiastic, vulnerable to competitors
Detractors0-6Unhappy customers, can damage brand through negative word-of-mouth
Key Insight: Passives aren't counted in NPS but are important—they're at risk of churning. Don't ignore them.

NPS Benchmarks

  • Below 0: Needs improvement
  • 0-30: Good
  • 30-70: Great
  • Above 70: World-class

Industry Varies

  • Tech/SaaS: Average ~30-40
  • Airlines: Average ~20-30
  • Telecom: Often negative
  • Apple, Amazon, Netflix: 60-70+

Using NPS Effectively

Best Practices

  • Follow up: Ask "Why did you give that score?"
  • Close the loop: Contact detractors to resolve issues
  • Track over time: Trends matter more than single scores
  • Segment: Analyze by customer type, product, region
  • Link to behavior: Correlate with retention, revenue
  • Empower action: Share with frontline teams

Transactional vs. Relationship NPS

  • Transactional: After specific interaction
  • Relationship: Periodic overall assessment

Limitations of NPS

  • Single metric: Doesn't explain why
  • Cultural bias: Scoring norms vary by country
  • Doesn't predict churn perfectly: Passives may stay, promoters may leave
  • Gaming: Can be manipulated by employees
  • Response bias: Who responds affects score

Conclusion

Key Takeaways

  • NPS measures likelihood to recommend on 0-10 scale
  • NPS = % Promoters - % Detractors
  • Promoters (9-10): Growth drivers; Detractors (0-6): Risk
  • Above 30 is generally good; above 70 is world-class
  • Follow up with "why" and close the loop
  • Track trends over time, segment for insights
  • Use NPS as one metric among many, not the only one