Net Promoter Score — Part 1

This is a slightly altered version of my article that originally appeared on February 11, 2022 on my Medium page.

I met Net Promoter Score (NPS) survey back in summer 2020. It was my third month at The Predictive Index and I was still trying to get to speed. I’d never heard of NPS before, but when I did some research, I saw how I can apply this at my current position to help leaders make data-driven decisions.

NPS: What it is

NPS is a research metric that companies use to measure customer advocacy. “What is the likelihood that you’d recommend your product or services to a friend or a colleague?” is the root question for NPS surveys. It’s typically a Likert scale (severity measured by numbers from 0 to 10), with 9 and 10 dubbed as “Promoters”, 7 and 8 as “Passives”, and 0 to 6 as “Detractors”. The percent difference between promoters and detractors gives you the Net Promoter Score.

Example: You have 177 promoters, 112 passives, and 93 detractors, totaling in 383 responses.

Your promoters make up ~46% of your respondents: $$177 / 383 = ~46\%$$ Your detractors make up ~24% of your respondents: $$94 / 383 = ~24\%$$ Your NPS is $$46–24 = 22.$$

Right away, you probably realized several things about NPS:

• It’s simple to understand.
• It’s simple to calculate.
• It’s simple to set up.

What is a good NPS score?

This is a question that’s been discussed many times, yet there is yet to be a number everyone agrees on. Bain & Company says that it should be at least above 0. Anything below that indicates that something needs to change: you have more detractors than promoters as a % of your respondents. Pundits seem to think that the territory above 20 is considered good, and anything above 50 is top notch.

NPS: What it is not

Positive arguments on NPS revolves around its simplicity. It is universally applicable — all you need is a free survey software. You can even do it in person. Yet, NPS does NOT help you with several things:

• NPS doesn’t tell you what a good score looks like. This depends on your industry, peers, competitors — your data is as good as others people’s data.
• NPS completely disregards the passive sentiment (7s and 8s) when calculating scoring. This is unfortunate: Passives can make up anywhere between 25% and 50% of all your respondents. Moreover, at The Predictive Index, we’ve found out that passives act like detractors during times of crisis and act like promoters when market conditions tend to be favorable. Churn rates and product engagement are decent leading indicators to look at.
• NPS is a lagging indicator. It only communicates the past performance of your products and services. It doesn’t tell you what your score would be if you were to make changes to your business-as-usual.

Despite all the disadvantages, NPS is still an important advocacy tool. It doesn’t hurt to take advantage of all the data you’re getting from your advocates — both qualitative and quantitative.