sK1303 export date: 21 Dec 2024

Definition

Measures the net difference between promoters and detractors, out of all customers that responded to the survey.

Variations

# Promoter Score
# NPS

Related KPIs

% Customer satisfaction with new products and services

Subordinated measures

Purpose

To monitor the level of customer loyalty by evaluating the extent at which customers act as brand ambassadors.

BSC perspective

Customer

Objective measured

Improve customer satisfaction

Data capture period

Data collection method

Customer Satisfaction Survey and Brand health trackers

Limitations

Being based on customer surveys, results can be altered by the respondents' subjectivity or incentives given by the company to stimulate responses.

Threshold examples

• Red: <50
• Yellow: 50-80
• Green: >80

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.

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. Net Promoter, Net Promoter Score and NPS are registered trademarks of Fred Reichheld, Bain & Company and Satmetrix.
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

http://www.callcentrehelper.com/top-tips-for-improving-netpromoter-scores-nps-42754.htm
http://blogs.hbr.org/2011/05/how-philips-uses-net-promoter/

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