How to measure Net Promoter Score (NPS) and improve customer loyalty

The Net Promoter Score (NPS) is measured by a customer survey.

The survey

The survey usually has only one question:

“On a scale of 0 to 10, how likely would you be to recommend our product or service to a friend or colleague?”

Customers are classified into three categories:

• Promoters: Customers who respond with a 9 or 10 are considered promoters. They are the most satisfied customers and are more likely to recommend the product or service to others.
• Passive: Customers who respond with a 7 or 8 are considered passive. They are satisfied with the product or service, but are not enthusiastic enough to recommend it to others.
• Detractors: Customers who respond with a 0, 1, 2, 3 or 4 are considered detractors. They are dissatisfied with the product or service and are likely to criticise it to others.

NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. A high NPS indicates that the majority of customers are satisfied with the product or service and are willing to recommend it to others.

An example

Suppose a company sends out an NPS survey to 1,000 customers. The survey responses fall into three categories:

The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. In this case, the percentage of promoters is 40% and the percentage of detractors is 10%. Therefore, the NPS is 40 – 10 = 30.

How NPS data is interpreted

An NPS of 30 is considered a good result. An NPS above 50 is considered excellent, while an NPS below 10 is considered bad.

Additional information

In addition to NPS, the company can also analyse the survey results to better understand the reasons for customer satisfaction or dissatisfaction. For example, the company can ask promoters why they are so satisfied with the product or service. It can also ask detractors why they are dissatisfied.

How is the survey conducted?

NPS can be measured wherever there are customers. Companies measure it through online surveys, telephone surveys or in-person surveys.

NPS can be measured by anyone who has access to customer data. Businesses, non-profit organisations and government institutions measure it.

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Who measures NPS

NPS can be measured by any person or company that wants to assess customer satisfaction. There are many tools available to help businesses measure NPS. NPS surveys can be submitted through a variety of platforms, such as SurveyMonkey, Qualtrics and Google Forms.

How to improve NPS

To improve NPS, companies should focus on satisfying customer needs. This can be done by improving the product or service, increasing customer service or creating a better customer experience.

Final recommendation

Financial advisors, market advisors and M&A lawyers can be a valuable source of information and advice for companies considering an acquisition or merger. These advisors can help companies understand the risks and benefits of a transaction, assess the value of the target company and negotiate the terms of the deal.