sK1303 export date: 19 Apr 2024
Functional Areas
Marketing & Communications Marketing
Industries
Any
KPI record
sK1303
Sub-categories
Marketing
Sub-categories
Any
Tags
portfolio, customers
Name
# Net Promoter Score
Description
Definition
Measures the net difference between promoters and detractors, out of all customers that responded to the survey.
Note: Net Promoter, Net Promoter Score and NPS are registered trademarks of Fred Reichheld, Bain & Company and Satmetrix.
Variations
# Promoter Score
# NPS
Related KPIs
% Customer satisfaction with new products and services
Calculation
Subordinated measures
A = # Promoters
B = # Detractors
C = # Customers
Calculation formula (A/C)*100-(B/C)*100
Trend is good when Increasing
Focus
Purpose
To monitor the level of customer loyalty by evaluating the extent at which customers act as brand ambassadors.
BSC perspective
Customer
Objective measured
Increase customer loyalty
Data Profile
Data capture period
Spot
Standard reporting frequency Quarterly
Data collection method
Customer Satisfaction Survey
Limitations
Being based on customer surveys, results can be altered by the respondents' subjectivity or incentives given by the company to stimulate responses.
Targets
Threshold examples
- Red: [-100 - 0]
- Yellow: [1 - 40]
- Green: [41 - 100]
Target setting notes
Thresholds are for exemplification purposes only. # Net Promoter Score can greatly vary from one company to another depending on the industry
or on the methodologies used to determine and benchmark a NPS.
Some argue that benchmarking might not be suitable, as companies may use different-point scales (the standard is 11, but some use 10, some 5 and so forth). Also, some companies may resort to incentives so as to increase the rate of responses. Some organizations consider that any NPS above 0 is a good score as it means that there are more promoters than detractors, however, the commonly agreed methodology states that only an NPS above 50 is considered satisfactory.
Analysis and Resources
Overall notes
NPS is used nowadays by many large companies as a customer feedback tool. It gives an unambiguous number that is easy to understand for all employees and useful as input for managers to steer the company. NPS also gives a good indication of growth potential and customer loyalty for a company or product.
To understand the motives of Promoters and Detractors, it is recommended to accompany the NPS question by one or more open questions that probe the underlying reasons behind the given score. This allows managers to make the appropriate adjustments to increase the future NPS, either by boosting the percentage of Promoters, either by reducing the proportion of Detractors (or better yet, a combination of both).
Additional resources
References
1.Rao, D. N. (2018) How net promoter score relates to organizational growth, available at:
https://www.researchgate.net/publication/328305049_HOW_NET_PROMOTER_SCORE_RELATES_TO_ORGANIZATIONAL_GROWTH