What is a Net Promoter Score (NPS)? The Complete Guide

NPS measures how likely a customer is to recommend a product to others. It helps businesses see how loyal and satisfied their customers are.

If users enthusiastically promote the product to someone else, they are more likely to continue using and paying for it themselves.

Businesses use their NPS to help in a variety of areas:

• Measure customer loyalty: NPS gauges customer loyalty, assisting businesses in understanding how likely customers are to repeat purchases.

• Gather customer feedback: NPS can include open-ended questions, offering insights into what parts of the product, service, or experience customers like or dislike.

• Determine their business growth: High NPS scores correlate with faster business growth due to positive word-of-mouth referrals, indicating a company’s potential.

• Focus on customer experience: NPS highlights customer dissatisfaction, enabling you to make targeted improvements.

• Gain a competitive advantage: High NPS leads to customer loyalty, making it difficult for competitors to attract customers, even with lower prices.

• Make strategic decisions: NPS data informs strategic decisions by identifying how changes in products or services affect customer satisfaction.

Rational vs. transactional NPS

There are two main ways customers use NPS to understand customer data: rational NPS and transactional NPS.

Rational NPS looks at the overall relationship between the customer and the company. It asks them a general question about their loyalty, covering their entire experience with the brand. This survey is done periodically and helps with long-term planning and in making significant business decisions.

Transactional NPS concentrates on specific interactions, like purchasing or talking to customer support.

Customers are asked the same loyalty question about their recent experience—“How likely are you to recommend our product based on your recent customer support interaction?”

This survey happens right after the event so companies can collect real-time responses. It helps them fix issues quickly and make micro improvements.

Most businesses use a mix of both approaches to grasp how customers feel about their brand and products.

What is eNPS?

Employee Net Promoter Score (eNPS) is like the NPS for internal teams. Instead of measuring customer loyalty, it checks employees' loyalty to their workplace.

eNPS works by asking employees if they’d recommend their employer to others. This straightforward question gives businesses a quick peek into their colleagues’ happiness and helps them find ways to improve things at work.

You can also use eNPS to see if your HR programs are effective, how engaged your employees are, and gauge how healthy the organization is in your workers’ eyes. It’s a helpful tool for keeping employees happy and motivated and in preventing employee turnover.

Most companies determine NPS by asking customers one key question:

“On a scale of 0 to 10, how likely are you to recommend our brand/product/service to a friend, colleague, or family member?”

Customers' answers can be divided into three groups:

• Promoters (score 9-10): These customers are thrilled and likely to recommend the company to others.

• Passives (score 7-8): They’re satisfied but could be more excited, so they are less likely to promote the company actively.

• Detractors (score 0-6): These customers are unhappy and won’t recommend the company, which could harm its reputation if they share negative opinions.

To calculate the NPS, you subtract the percentage of detractors from the percentage of promoters— the score ranges from +100 to -100.

A higher score usually means a stronger customer relationship and potential growth through positive referrals. Lower scores signal areas that need improvement for customer satisfaction and loyalty.

A good NPS can vary depending on the industry and company circumstances.

Let’s examine how some businesses consider their scores to understand what’s “good” for them.

• A positive NPS: An NPS above zero is a good start. It means happier customers (promoters) than unhappy ones (detractors). This indicates most customers view the company positively.

• Beat competitors: Comparing your NPS with competitors gives context. If your NPS exceeds theirs, your customers are more satisfied and loyal than similar businesses.

• Strive for excellence: Many companies aim for average NPS scores of 30 to 50 or above. Achieving this indicates strong customer loyalty and higher chances of getting positive referrals and repeat business.

• Consider the context: Understand your industry and customer expectations. Even a slightly positive NPS is good in some industries if the norm is low—like in the airline, telecom, and utility sectors. In areas where customers are generally satisfied (e.g., luxury hospitality, fashion ecommerce, and wellness), a higher NPS helps you stand out.

• Continuously improve: Instead of just looking at the number, focus on how your NPS changes over time—regularly measuring it and working on improving matters more than the specific score.

• Value qualitative feedback: Don’t simply rely on the score—pay attention to what customers say in their feedback, too. Understanding their reasons for ratings is as important as aiming for a good NPS—it gives you insight into what you’re doing right and where you can improve.

Improving your NPS is all about making customers happy and addressing their needs.

Here are some strategies to help you do that.

• Understand customer needs: Regularly ask customers what they like, dislike, and expect. Listen to their feedback, find common themes, and work on fixing issues.

• Deliver great service: Train customer-facing staff to be friendly, listen well, and solve problems fast. Show customers you care about their concerns.

• Personalize interactions: Use customer data to personalize their experience and make them feel valued and understood. Anticipate their needs using predictive analytics and offer solutions that match their preferences.

• Enhance the user experience: Make your website and apps more accessible. Simplify the journey for customers to find what they want, make purchases, and seek support.

• Reward loyalty: Have loyalty programs to thank repeat customers, encouraging them to stay loyal to your brand. Surprise them with special offers or personalized gifts to show appreciation.

• Build trust: Be honest about your products, services, and policies. If something goes wrong, admit to the error and fix it. Being open and transparent builds trust with customers.

Remember, keeping customers happy is an ongoing task. It would help if you continued listening, understanding, and acting on what customers tell you to improve your NPS score. It requires a long-term commitment to their satisfaction.

Creating a practical NPS survey means designing a clear, concise, and targeted strategy that generates valuable customer feedback. You’ll need to collect their scores and, ideally, their reasons for the scores they gave.

This involves several key steps.

1. Set your goals: Decide what you want to know. Are you measuring overall customer satisfaction, feedback on a recent interaction, or brand loyalty?
2. Ask the right question: Use the standard NPS question ("On a scale of 0-10, how likely are you to recommend...") and consider adding an open-ended question like "Why did you give this score?" to gather qualitative data.
3. Choose a clear scale: Use a simple zero to ten scale (or equivalent) and clearly explain what each score represents.
4. Keep it short: Don’t overwhelm customers—stick to a few questions. Add one or two related questions to gather more feedback on your goals if needed.
5. Time it well: Consider the best time to send the survey. It could be after a purchase or customer support interaction for real-time feedback.
6. Distribute smartly: Choose channels to distribute your survey, such as email, SMS, or your website. Personalize the survey invitation where possible, making people more likely to respond.
7. Analyze and act: Analyze the quantitative scores to get your NPS and the feedback to understand their reasons. Address concerns of detractors and passives to turn their experience into a positive one.
8. Improve and monitor: Regularly review feedback and NPS scores to identify trends and improve your product and processes. Monitoring changes helps you understand the impact of your efforts.

NPS is a valuable tool for understanding customer loyalty. It reveals how likely customers are to recommend your products, enabling you to make changes that foster brand advocacy.

With Amplitude, understanding your NPS data is simple. Our analytics platform transforms scores into practical insights so you can enhance customer experiences and boost business growth. Understanding your customers can build stronger relationships and enable you to tailor your services to their needs.

Make the complex world of metrics simple, accessible, and advantageous for your business. Contact Amplitude today.