Net Promoter Score: what it measures, how to calculate it and its limits

Net Promoter Score (NPS) is a customer loyalty measure built from one question: "How likely are you to recommend [company] to a friend or colleague?" People answer on a scale from 0 to 10. Those who answer 9 or 10 are promoters, 7 or 8 are passives, and 0 to 6 are detractors. NPS is the percentage of promoters minus the percentage of detractors, so it runs from -100 to +100.

It is easy to collect and easy to track, which is why it is so widely used. Its weaknesses are just as real: the number does not explain itself, it is noisy with small samples, and scores differ by country and industry. Use it as a signal of where to look, then ask why.

Where NPS came from

Fred Reichheld of Bain & Company introduced the idea in a December 2003 Harvard Business Review article, The One Number You Need to Grow. The article summary says it was based on two years of research that linked answers to various survey questions with customer purchasing and referrals, and that in most industries studied, the share of customers enthusiastic enough to refer a company correlated with its growth relative to competitors.

Bain's history of Net Promoter adds that the team worked with data supplied by NICE Systems and that in 11 of the 14 industry case studies it compiled, no other question predicted behavior as well. Bain also says it learned that the score alone was not enough, and that asking customers "why" in their own words is what makes improvement possible. Net Promoter and NPS are registered trademarks of Bain, NICE Systems and Reichheld.

How to calculate NPS

Here is a hypothetical survey with 200 responses:

• 90 people answered 9 or 10 (promoters)
• 70 people answered 7 or 8 (passives)
• 40 people answered 0 to 6 (detractors)

The arithmetic:

• Promoters: 90 ÷ 200 = 45%
• Detractors: 40 ÷ 200 = 20%
• NPS: 45 − 20 = 25

Passives count toward the total but not toward either group, as NN/g's explanation notes. Three common mistakes:

• Leaving passives out of the total. Using 130 as the base gives about 69% − 31% = 38, which overstates the score by more than 13 points.
• Reporting the average rating. An average rating, such as 7.8 out of 10, is a different measure. You need the three groups.
• Changing the scale. Bain says the 0 to 10 scale was chosen partly because people sometimes pick "1" by mistake on a 1 to 10 scale, thinking it is the top. If you change the scale, your score is no longer comparable with anyone else's.

How precise your score is

An NPS from a sample has a margin of error, and it is wider than many people expect because the score combines two percentages. MeasuringU researchers Jim Lewis and Jeff Sauro compared methods for computing NPS confidence intervals and recommend an adjusted-Wald method from Brendan Rocks's 2016 paper. Applied to the example above, at 95% confidence:

1. Add 3 to the sample: 200 + 3 = 203
2. Add 0.75 to promoters and detractors: 90.75 and 40.75
3. Adjusted shares: 90.75 ÷ 203 = 0.447 and 40.75 ÷ 203 = 0.201
4. Adjusted NPS: 0.447 − 0.201 = 0.246
5. Variance: 0.447 + 0.201 − 0.246² = 0.587
6. Standard error: √(0.587 ÷ 203) = 0.054
7. Margin of error: 1.96 × 0.054 = 0.105, or about ±10.5 points

So the score of 25 from 200 responses is consistent with a true score anywhere from about 14 to 35. With the same mix of answers from 800 people, the margin shrinks to about ±5 points. From 40 people, it is about ±23 points. A five-point change between quarters on 200 responses is not, by itself, evidence that anything changed.

What NPS does not tell you

NN/g's review of NPS lists several limits worth knowing:

• It tells you how people feel, not why. Even a follow-up "why" question relies on self-report, and some people won't bother to answer it.
• It needs a reasonably large sample. NN/g warns against reporting NPS from a handful of usability sessions.
• Grouping throws away information. Moving customers from a 2 to a 5 is a real improvement, but they are still counted as detractors.
• It measures loyalty to a whole company or product. It is a poor way to judge a single screen or feature change.
• It is easy to game. NN/g gives examples such as staff mentioning the survey only after a good call, or offering a coupon in exchange for a rating. As soon as a team is judged on the number, watch for this.

Scores also vary by country. NN/g summarizes a 2021 Qualtrics XM Institute study of 17,509 consumers in 18 countries: when asked about companies they liked, respondents in India and Mexico produced scores of 60 or more, while respondents in Japan produced -47. NN/g recommends keeping the standard calculation and noting such context rather than adjusting the formula.

NPS is not the only loyalty measure with research behind it. Dixon, Freeman and Toman argued in Harvard Business Review that, for service interactions, a customer effort score predicted loyalty better than satisfaction or NPS. Pick the measure that matches the decision you need to make.

Relationship, experience and benchmark scores

Bain distinguishes three types of NPS and says they should not be compared directly:

• Relationship NPS is asked without a trigger, often once or twice a year, to measure general sentiment.
• Experience NPS is triggered by a specific interaction, such as a support call. Bain suggests surveying any one customer no more than once every three months.
• Competitive benchmark NPS is collected double-blind by a third party across you and your competitors. Bain notes this avoids the bias of surveying only your own customers, some of whom may not bother to answer.

If you want to know whether your score is high for your market, what counts as a good NPS covers published benchmarks and how to read them.

Pair the score with follow-up conversations

Add one open question right after the score: "What is the main reason for your score?" Then call a few people from each group:

• Detractors: "Walk me through the last time [product] let you down. What happened next?"
• Passives: "What would have to change for you to recommend us without hesitation?" Bain describes passives as satisfied for now but open to a competitor.
• Promoters: "Have you recommended us to anyone? What did you say?" The answer tells you which benefit people actually repeat.

In B2B, ask several people per account. Bain's page on NPS in B2B notes that accounts include gatekeepers, business leaders and operational users with different needs. Customer survey questions has a short survey and call guide you can reuse, and customer interview questions has more wording.

Your next step

Calculate your score with passives in the total, work out its margin of error and read the "why" answers before you discuss the number. Then book five to ten calls split across detractors, passives and promoters.

Your own survey only hears from your customers. To understand how buyers who chose a competitor see the category, Instant Expert can find people who match a description you write. You review who it finds, it sends your invitations, and you pay only for calls that get booked. The directory page for product professionals in enterprise SaaS is one place to start.