The Net Promoter Score or NPS is a universal measure of customer satisfaction and the strength of customer loyalty. It is based on the key question: “How likely is it that you would recommend our company/product/service to a friend or colleague?”
Definition: Net Promoter Score (NPS)
The NPS is measured on a standardized scale from 0 to 10. This scale is used as a response option to the above-mentioned question about the likelihood of recommending the company, product or service. The answer option “zero” corresponds to the fact that there will be no recommendation at all and the answer option “ten” corresponds to the fact that there will definitely be a recommendation.
The answers are divided into three segments, which are defined as follows:
- Promoters (9-10): Customers who would actively recommend the company and are seen as loyal supporters.
- Passives (7-8): Satisfied customers who will not actively recommend the company.
- Detractors (0-6): Customers who criticize the company and could potentially spread negative word-of-mouth.
How is the Net Promoter Score calculated?
The NPS is measured on a numerical scale (usually from 0 to 10) and is calculated as the difference between the percentage of promoters (customers who give a rating of 9 or 10) and the percentage of detractors (customers who give a rating of 0 to 6).
The formula is:
NPS = % Promoters – % Detractors
The NPS thus provides a comparable, quantitative indicator of customer satisfaction, and you can measure changes in NPS that correlate with changes in the product or customer care.
Example calculation
The NPS has a general value range of -100 to 100. Suppose the NPS survey receives 100 responses, of which 60 are promoters, 20 are passives and 20 are detractors. This results in an NPS of 40.
NPS = 60/100 – 20/100 = 60% – 20% = 40
A negative NPS would occur, for example, if the 100 responses included 20 promoters, 40 passives and 40 detractors:
NPS = 20% – 40% = -20
Example NPS survey – created with Riddle.com
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What factors influence the NPS?
Typical factors that influence the NPS are:
- Product quality and freedom from defects – does the product perform its tasks without problems and without causing defects?
- Customer service – how quickly are customer queries responded to and can customer service provide assistance?
- User-friendliness – can customers quickly find their way around the product without much help? How steep is the learning curve? Can important functions be quickly found without problems?
- Value for money – does the product deliver value that matches the price?
In addition to these internal factors, external factors can also influence the NPS. A better or comparable but cheaper competitor product will negatively influence the NPS if a customer is annoyed that they did not choose the competitor. General market trends also influence the NPS, without any individual company being able to react to them. A good example of this is the hype surrounding bubble teas in 2011 and 2012.
During this time, numerous bubble tea shops opened and even large chains such as McDonalds added bubble tea to their range. After a report by RWTH Aachen University about substances in bubble teas that were allegedly harmful to health and a subsequent wave of negative reports, the market for bubble tea collapsed completely. NPS surveys of large companies that have included bubble tea in their range suddenly show a change from a very high to an extremely low NPS value, without this being within the company’s sphere of influence.
Sources: https://globaledge.msu.edu/blog/post/57326/the-bubble-tea-industry–how-one-drink-found-global-success and https://en.wikipedia.org/wiki/Bubble_tea
What is a good NPS value?
A “good” NPS value depends heavily on the industry. For example, banks traditionally tend to have rather poor NPS values, while car brands tend to have very good NPS values.
The University of Bamberg has published a comprehensive study on various industries and compared the NPS values of individual industries and different user groups (non-customers, regular customers, etc.). For the UK, Marketing Weekpublished the NPS for some popular UK brands.
Across all user groups, Amazon achieved the best NPS value of 23, while Deutsche Bank achieved a value of -78.
Further sample values from the survey of regular customers:
| Brand | NPS value |
|---|---|
| Audi | 63 |
| BMW | 61 |
| Amazon | 60 |
| Aldi | 44 |
| Coca-Cola | 35 |
| Pepsi | 25 |
| 18 |
(Note: this study is from April 2013 – today’s NPS values might be quite different)
But here, too, it is very important to differentiate who is surveyed. For example, if you only look at the ratings of regular customers, Audi, with an NPS of 63, is ranked first among the major brands, while Coca-Cola, with an NPS of 35, is only ranked 18th.
Generally speaking, the goal should be to achieve an NPS greater than zero. This ensures that there are more people who recommend the company than people who speak negatively about it.
If the company is not a well-known brand like Audi or Coca-Cola, it doesn’t usually make sense to conduct an NPS survey among non-customers. As soon as only existing customers are surveyed, the goal should be an NPS well above zero.
Industry-specific sample values
From the studies, one can see the typical NPS range for individual industries. These are as follows:
| Industry | NPS range | Reason |
|---|---|---|
| Tech companies like Apple, Tesla, Netflix | 50 bis 75 | Customers are often enthusiastic about innovations, user-friendliness, and high brand value |
| E-commerce companies like Amazon, Zalando | 30 bis 60 | The NPS is strongly influenced by delivery times and return options. |
| Financial sector with banks and insurance companies | 10 bis 40 | Customers have high expectations in terms of security, transparency, and service, which often cannot be met. |
| Energy suppliers such as municipal utilities and electricity providers | -10 bis 20 | The industry is struggling with detractors due to price increases and generally poor customer service |
| Telecommunications providers such as Vodafone or O2 | -20 bis 10 | The industry has a negative reputation in terms of contract durations and customer service. A positive NPS value is rare here. |
The following scale can be applied to industries across the board:
- NPS over 50 -> excellent
- NPS from 0 to 30 -> shows that the company is performing solidly, but there is room for improvement
- NPS below 0 -> there are serious problems with customer satisfaction
Advantages and disadvantages of the NPS
The main advantage of the NPS value is the easy comparability between periods within one’s own company and with companies in the same industry. Since it is a standardized question, one can easily observe the changes of the NPS over time and form correlations with product or process changes.
NPS can be used across industries and enables quick trend analyses.
One of the primary disadvantages of NPS is the fact that the standard version does not provide any justification for the rating. Of course, you can ask follow-up questions based on the rating using suitable tools. This requires branching logic so that a suitable follow-up question can be asked depending on the rating. For example, “What is the main reason you would not recommend us?”
Another disadvantage is that the evaluation often depends very much on the last user experience. A generally satisfied user who has encountered a disturbing product error shortly before the survey will almost certainly not give a good evaluation, even if they have been satisfied with the product for years. The customer status (regular customer, occasional user, new user, etc.) can also have a significant influence on the NPS.
Ideally, the customer status is transferred to the NPS tool so that it can be taken into account in the evaluation. With Riddle, this is very easy to do using the Riddle Data Layer. This allows the customer status to be transferred completely anonymously to the NPS survey and stored together with the survey result.
Areas of application for the Net Promoter Score
Below, we have listed some areas of application for the NPS for different industries.
Sports clubs
Measuring member satisfaction
A sports club could regularly send NPS surveys to members to find out how satisfied they are with training conditions, coaching performance, or club life.
Example: A tennis club asks its members about their satisfaction with court availability. Detractors might point out that the booking systems are inefficient, leading to optimization.
Improving events
NPS can be used for club events such as tournaments or summer festivals.
Example: Participants receive an NPS survey after a club run. Promoters might recommend the event, while detractors might criticize poor organization or a lack of refreshments.
Feedback for coaching performance
NPS can be used specifically for training sessions or coaches to measure the quality and effectiveness.
Example: A youth soccer club uses NPS feedback from parents to evaluate satisfaction with the coaching skills and interaction with the children.
Visit our dedicated page for sports teams to learn more about how Riddle can help with fan engagement and revenue generation.
E-commerce
Strengthening customer loyalty
The NPS shows whether customers are willing to recommend the company. Regular queries after purchases can help identify weaknesses.
Example: An online clothing retailer asks customers about their shopping experience. Low scores could indicate long delivery times or poor product quality, while promoters praise the easy returns process.
Optimizing the user experience
A low NPS can indicate problems with navigation or checkout.
Example: An electronics retailer introduces an NPS after using its app and discovers that detractors are often dissatisfied with the search function. A better search feature can increase the NPS.
Targeted customer approach
The NPS can be segmented to reward promoters with exclusive offers and to target detractors for recovery.
Example: An online furniture store offers promoters discounts on their next order and asks detractors for details of their complaints.
Publishers
Increase reader loyalty
Publishers can regularly ask their subscribers about their satisfaction with the content to understand what is well received.
Example: An online news portal like “Spiegel Online” uses the NPS to measure satisfaction with special subscriber content. Promoters praise investigative reports, while detractors criticize monotonous content.
Tailoring content to target audiences
NPS can help you better understand which topics, sections, or authors resonate with readers.
Example: A lifestyle magazine uses NPS surveys to discover that recipes and fitness tips are more popular than political analysis pieces and decides to focus more on these topics.
Optimizing the subscriber experience
NPS can be used to identify problems in the subscription process or with digital platforms.
Example: A publisher of academic books uses NPS for its e-book platform and finds out that many detractors are complaining about technical problems. The platform is revised to provide a better user experience.
Learn more how Riddle is helping leading global publishers to generate ad revenue, increase time spent on site and improve data collection.
Why is the NPS important for companies?
NPS is an excellent early indicator that can identify potential problems in the product or in the sales process. With constant monitoring, it is possible to react very quickly to problems that would otherwise only occur much later in the form of fluctuations in sales. In the long term, the NPS correlates with an increase in sales and the growth of the company in comparison to the market. The NPS can therefore be used very well to develop and test strategies that reduce churn rates in the long term and increase customer loyalty.
How can companies improve their NPS?
First and foremost, a poor NPS value is more of an opportunity than a major problem. Therefore, every company should dare to ask for the NPS, even if the expectations of the value are rather low.
As soon as a starting value is measured, you can actively work on improving the product offering and see the success of the changes to the NPS.
Strategies for optimizing the NPS
If the NPS value is poor, it makes sense to add another question to the standardized question. By using branching logic, you can ask detractors a different question than you ask promoters.
Though you can ask promoters why they recommend the product, it’s more important to ask detractors: “What is the main reason you would not recommend our product?” This can be a free-text question if no reasons are known internally, or a multi-choice selection if, for example, a list of common complaints can be provided by the customer support team.
Based on the detractors’ answers, the problems can now be addressed directly and the product, communication, training, or support can be improved to permanently increase the NPS.
Calculate the NPS with Riddle
When using a Net Promoter Score block in a Riddle survey, Riddle calculates the NPS value automatically and also provides a corresponding classification of the value.
Since Riddle also displays the development of the NPS over time in a graphic, no further tools are necessary to calculate the NPS. The NPS block is available in all Riddle plans and can be used without limits for any number of surveys.
Frequently asked questions
The Net Promoter Score was developed in 2003 by Fred Reichheld, a partner at Bain & Company, in collaboration with Satmetrix.
The NPS value indicates the likelihood that customers would recommend a company, product, or service. A high positive NPS indicates strong customer loyalty, while a negative NPS indicates dissatisfaction and potential churn.
NPS measures customer satisfaction and loyalty by determining how likely customers are to make a recommendation. This serves as an indicator of a company’s future growth potential.
Customers are asked a standardized question: “How likely is it that you would recommend our product/company/service to a friend or colleague?”
The answer is given on a scale of 0 (very unlikely) to 10 (very likely). Based on the answers, customers are divided into three categories:
Promoters (9-10): enthusiastic and loyal customers.
Passives (7-8): reasonably satisfied but unenthusiastic customers.
Detractors (0-6): dissatisfied customers who will not recommend you.
The NPS value is calculated by subtracting the percentage of detractors from the percentage of promoters. The passives are ignored. The NPS value can range from -100 to +100.
The Net Promoter Score (NPS) measures customer loyalty and the likelihood that customers will recommend a company. It provides a comprehensive overview of overall customer satisfaction and loyalty. In contrast, the Customer Satisfaction Score (CSAT) assesses satisfaction with specific interactions or aspects of a product or service. While the NPS focuses on long-term loyalty, the CSAT focuses on immediate customer experiences.
The Sean Ellis Indicator asks how disappointed you would be if the product/company/service no longer existed. This indicator is a very good measure of the product-market fit of new products. However, the inventor of this indicator – Sean Ellis – recommends refraining from using this question for established products, as it may raise concerns among customers that the product will be discontinued. For established products, the NPS is much more suitable.
The frequency of NPS measurement depends on a variety of factors, including industry, customer interaction rate, and the organization’s ability to respond to feedback. In fast-paced industries with frequent customer interactions, continuous or quarterly measurement may be appropriate. In other areas, an annual survey may be sufficient. It is important that the organization is able to respond to the insights gained in a timely manner.
NPS values collected with Riddle are 100% anonymous. Riddle does not use trackers or cookies, and there is no way for Riddle, as the provider of the NPS survey tool, to link the vote to a user profile.
The creator of the NPS survey can, of course, choose to forgo anonymization and ask the user for data such as name and email and store this together with the NPS response. It is also possible to use the Riddle Data Layer to transfer your own customer data, such as the customer number, customer status, etc., to the Riddle and then store this data together with the survey results.
