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How to calculate Net Promoter Score®?

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What is Net Promoter Score®?

Net Promoter Score®, or NPS®, is a customer satisfaction metric that measures consumer satisfaction and customer loyalty.  NPS® surveys normally just have one question about the customer’s likelihood to recommend the company to others. This question is often framed in different ways but is usually always along the lines of “On a scale of 0-10, how likely are you to recommend us to others?”.  Higher scores indicate that the customer is more likely to spread a good word about the company, whereas lower scores indicate that the customer is not only unlikely to do so but may even discourage new potential customers from purchasing from the company.
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How to calculate Net Promoter Score®?

Net Promoter Score® can be calculated using the following few steps:
  1. Categorize respondents into groups
  2. Count the number of respondents 
  3. Calculate percentage of promoters and detractors
  4. Calculate NPS®
  • Categorize respondents into groups
In order to calculate NPS®, all survey respondents must first be categorized into different groups. Depending on the way the customer scores the survey, they are put in either one of the following categories:
  1. Score 9 and 10 – Promoters
  2. Score 7 and 8 – Passives
  3. Score 0 – 6 – Detractors
Promoters are the customers who choose a score of 9 or 10 in the NPS® survey. They are most likely to spread a good word about the brand and recommend it to people. These customers love the brand and may actively promote it. Passives are the customers who choose a score of 7 or 8 in the NPS® survey. As the name suggests, these customers are most likely to be passive in the way they regard the brand and are thus unlikely to spread a good or bad word about the company. Detractors are the customers who choose a score between 0 to 6 in the NPS® survey. These customers usually won’t spread a positive word about the company, instead they’re more likely to dissuade potential customers from interacting with the company.
  1. Count the number of respondents 
After all respondents have been categorised into the three groups, the following three values must be counted: the number of total respondents, the number of promoters and the number of detractors.  
  1. Calculate percentage of promoters and detractors
After those three values have been tallied, they can be used to calculate the percentage of promoters and detractors. The following formulas can be used. Formula to calculate percentage of promoters: Percentage of Promoters = Number of Promoters      x 100 Total number of Respondents Formula to calculate percentage of detractors: Percentage of Detractors = Number of Detractors      x 100 Total number of Respondents
  • Calculate NPS®
After the percentage of promoters and detractors are calculated, the following formula can be used to calculate the NPS® score. Formula to calculate NPS® is as follows: NPS® = % of promoters – % of detractors The value of NPS®, when using this formula, will range between -100 and 100.

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What is a good NPS® Score?

NPS® scores range between -100 to 100. A negative score can indicate that the number of customers that are likely to speak badly about the company outweigh the number of customers that may speak well about it. Conversely, a positive score indicates that the number of customers that are likely to speak well about the company outweigh the number of customers that will speak badly about it. This is why a positive score is preferred. There are two ways of interpreting a company’s NPS® score; the relative method and the absolute method.  The relative method takes the industry standard and benchmarks into consideration. If the company’s NPS® score is relatively better in comparison to other companies in the industry then we can say it has a good NPS® score. Similarly, if the company’s NPS® score is relatively worse in comparison to other companies in the industry then we can say it has a bad NPS® score. The absolute method is simpler and interprets any positive score (scores above 0) as a good score as the company has more promoters than detractors, and interprets any negative score (scores below 0) as a bad score as the company has more detractors than promoters. 

Types of NPS® Surveys

There are two main types of NPS® surveys:
  1. Relationship Surveys 
  2. Transactional Surveys
Relationship surveys are carried out at regular intervals, such as monthly or half yearly for instance, in order to get an idea of customer loyalty. Companies that strive to have long-term business relationships with their customers can use NPS® relationship surveys to investigate the loyalty of their customers and their satisfaction over time. Transactional surveys, on the other hand, are deployed during certain points in the customer life cycle. Examples of key points in the life cycle can be after the purchase of a product, after an interaction with a sales executive, after the replacement of a product etc. Transactional surveys aim to investigate customer satisfaction more than loyalty.
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