Net Promoter Score® - What is it, why and how you use it

In this introduction to NPS we look at what it is and how you can use it to improve your business.

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Online NPS Calculator with Margin of Error

Enter your promoter, neutral and detractor counts to see your score and its margin of error, then compare two samples to find out if a change is real or just statistical noise.

Your NPS and margin of error

Your sample

Net Promoter Score

33

Margin of error: ±10.1 points

With 240 responses, an NPS of 33 has a margin of error of ±10.1 points, so the true score is likely between 23.2 and 43.4.

Compare two samples

Has your score really changed between two periods, or two segments?

Sample A
Sample B

Margin of error test: has it changed?
No

The 4.2-point difference is within the 4.3-point margin of error, so this could just be sampling noise.

Chi-squared test: has the mix changed?
No

We can't be 95% sure this is a real shift, it could still just be sampling noise.

Want to see the working? Read how these formulas work.

Free NPS Statistics Spreadsheet

What is Net Promoter Score?

Net Promoter Score, or NPS®, is a customer survey question and analysis approach used by companies, large and small, to measure customer experience and predict customer loyalty.

While there are many reasons why NPS is important, its main benefit is that a company’s Net Promoter Score versus its competitors is a predictor of future business revenue growth.

NPS is often used as a key metric in Voice of the Customer programs.

The Net Promoter Score Question

To determine NPS® the following question is added to an organisation’s customer feedback survey.

The response is scored on an 11 point scale from Very Unlikely (0) to Very Likely (10).

On a scale from 0 to 10, how likely would you be to recommend our company to a friend or colleague?
The Net Promoter Score Question

How to Calculate Net Promoter Score

Once the data is collected, Net Promoter Score is calculated by subtracting the percentage of 0-6 responses (Detractors), from the percentage of 9 and 10 responses (Promoters) to the “Would Recommend” question in your survey. The 7 and 8 responses (Neutrals) are ignored.

The overall score is then between -100 and +100.

So, in NPS parlance:

  • Anyone that gave you a 0-6 is termed a Detractor;
  • Anyone that gave you 7 or 8 is termed a Neutral; and
  • Anyone that gave you 9 or 10 is termed a Promoter

And, Net Promoter Score = Percentage of Promoter Responses – Percentage of Detractor Responses

Here is the NPS calculation in a formula:

Net Promoter Score=(Number PromotersTotal Respondents−Number DetractorsTotal Respondents)×100\text{Net Promoter Score} = \left( \frac{\text{Number Promoters}}{\text{Total Respondents}} - \frac{\text{Number Detractors}}{\text{Total Respondents}} \right) \times 100

The Net Promoter Score formula

Calculating NPS in Excel or Google Sheets is very simple and typically uses the COUNTIF function.

Or you can use the online NPS calculator on this page.

NPS Survey Design

Because the approach is seemingly so simple, just one question, many organisations start to use it by just adding the “would recommend” question to their existing surveys believing this is all that is needed. This is a mistake and does not work because it just tells you the current value, not how to improve.

When you implement Net Promoter you need to collect not just the “would recommend” rating but also the reasons for the rating.

You can do this in several ways;

  • qualitative feedback,
  • additional scored questions,
  • tagging of responses,
  • etc.

However you do it, the why part of the feedback is essential to your success.

Survey Design Resources

Why Net Promoter Score is Important for a Business

The primary reason that NPS is important is that it is an easy-to-use predictor of customer loyalty.

For this reason Customer Success Managers will often use it as one of their KPIs.

And companies who use NPS to focus their business improvement process see returns over and above the average.

There are many case studies to demonstrate these links.

  • A sustained one percentage point lift in NPS across all UK stores was worth about 0.5% of annual revenue to furniture retailer DFS, roughly £3 million a year and more profit than opening a new store.(source)
  • Philips Lighting tracked NPS account by account: where the score rose, revenue grew 70% on average; where it fell, revenue declined 24%.(source)
  • SmartBear turned promoter feedback into US$6 million of referral business within a year, closing at 47%, and lifted its save rate on at-risk accounts to 60%.(source)
  • Across seven US sportswear brands holding two-thirds of the market, a one point rise in NPS preceded 1.458 percentage points of sales growth the following quarter.(source)
  • Reichheld's FREDSI portfolio of industry NPS leaders returned 10.1 times over ten years against the Vanguard Total Stock Index's 3.6 times.(source)
  • Every NPS case study: named companies, real numbers, and links back to the original source in each case.

Relationship vs Transactional NPS Surveys

There are two ways to collect NPS data.

Relationship Surveys

The purpose of a Relationship Net Promoter Score survey is to identify how your business compares with its competitors with respect to overall customer loyalty and the drivers of overall customer loyalty. It is a way to benchmark your company against its competitors.

Relationship NPS surveys are performed on a regular basis, say every 6 or 12 months. They measure your organisation’s overall score.

Advantages of Relationship surveys

  • They give you understanding of your overall standing with the client
  • They can be compared to other organisation scores to benchmark your progress. Note that you need to be very careful doing this, but it can be done.

Disadvantages of Relationship Surveys

  • It can be difficult to understand how to act on the feedback that is received.
  • The process sometimes only generates results on a 6 monthly or annual basis.

Transactional Surveys

The purpose of a Transactional Net Promoter Score survey is to measure the NPS of each customer transaction and gather information about what customers liked and disliked during that interaction. This data can then be used to make improvements to the touchpoints in the customer journey and ultimately improve the overall NPS for both the transaction and the relationship with the customer.

Transactional surveys occur after a customer has been through an interaction with your business. It could be a sale, business process or customer service interaction.

Advantages of Transactional surveys

  • They tend to be more actionable because they relate to a specific interaction. That way you can summarise all the data around an interaction and make improvements
  • They provide an ongoing data stream that helps with organisation engagement
  • They tend to revolve around times when a customer’s perception of your business changes so are very relevant. It’s mostly at these interactions that customer loyalty will be improved (a good interaction) or destroyed (a bad interaction)

Disadvantages of Transactional Surveys

  • It’s very difficult to compare data with other companies because of the specific nature of each interaction.

The Origins of Net Promoter Score

The approach was first presented in a Harvard Business Review article titled: The One Number You Need to Grow in December 2003. The author of the article, Fred Reichheld, was well known in the customer loyalty industry and had performed some unique research.

He wanted to find out if one question could be used to predict a customer’s loyalty. So he asked tens of thousands of customers, lots of different questions, and then cross-referenced their loyalty using actual purchasing data.

By testing different approaches, empirically, he discovered that NPS was most often the best indicator of customer loyalty.

Until that time organisations had been using “customer satisfaction” or complex calculations of several different variables to try to predict loyalty. In general customer satisfaction was found to be quite a poor predictor of customer loyalty. The other approach, complex calculations, was found to be accurate but difficult to implement and understand.

In identifying the simple approach, Reichheld had identified an easy to use metric that actually predicted customer loyalty.

Loyalty Predictive Power of Different Survey Questions
Loyalty Predictive Power of Different Survey Questions (Source: "The Power Behind a Single Number", Satmetrix)

Employee Net Promoter Score (eNPS)

Employee Net Promoter Score®, or eNPS, is used increasingly often in company reports because it is a way to:

  1. Lower organisation costs by reducing employee turnover and the associated business impact
  2. Increase customer loyalty through higher employee engagement.

It uses the standard NPS question, just tweaked a little to be focused on the organisation’s employees not its products and services.

eNPS Resources

Net Promoter Score Survey Software and Tools

While the formula to calculate NPS is simple, operationalising it in your business is much more complex. You need to consider:

  • Automatic sending
  • Real-time reporting
  • Driver and Root Cause analysis
  • Time series data analysis tools
  • Segment data analysis tools
  • And more…

Market research style survey tools, SurveyMonkey, et al., are great for one-off surveys but lack the features needed operationalise and drive business success.

A dedicated NPS software platform is a better choice.

NPS Software and Tool Resources

NPS Statistical Data Analysis and Interpretation

If you’ve ever done a statistics course (at any level) you will have heard of sampling and confidence intervals. These terms help you to understand how closely the responses you receive match the overall population.

Unfortunately, because NPS is a net score (remember, Promoters – Detractors) the calculations are a bit different to those we do on other survey data.

Those calculations are not difficult but the concepts need a little explaining. Grab one of the resources in this post for a detailed explanation or download the spreadsheet which has the calculations already done for you.

Free NPS Statistics Spreadsheet

NPS Data Analysis Resources

NPS Benchmarks: What is a Good Score?

It’s common for companies to wonder how good their score is.

In practice this is a very difficult question to answer because so many factors can affect the score.

So external benchmarks can be difficult to find and apply to your specific business.

On the other hand internal benchmarks are very effective. In this case a good Net Promoter Score is one that is better than you had last quarter, month, year.

“Good” is any score that is continuously improving.

NPS Benchmark Resources

Criticism of Net Promoter Score

Just like any system, there are proponents and detractors for the use of the score. As a high-profile-system it has been researched substantially and much of the work published.

Criticism & Alternative Resources

Net Promoter Score Alternatives

There are only two NPS alternatives that are in common use as of 2026.

NPS Alternative: Customer Effort Score

Launched in the 2010 Harvard Business Review article “Stop trying to delight your customers”, Customer Effort Score (CES) is less popular than NPS and has its fair share of criticism.

To what extent to you agree or disagree with the following statement: The company made it easy to handle my issue.
Customer Effort Score Version 2

NPS Alternative: Customer Satisfaction (SAT)

Customer Satisfaction has been used in customer feedback surveys for decades. The question is worded thus:

How satisfied were you with the company's performance, on a scale of 1, Very Satisfied to 5, Very Satisfied.
Customer Satisfaction question

Implementing NPS

Successful NPS implementation is more than adding a new question to your existing customer feedback survey. There are five steps to properly launch it in a business.

net-promoter-score-implementation-plan
The Genroe Best Practice NPS Implementation Process

Step 1. Initiate

Confirm senior management buy in and create the company structures that you need to drive change. You will also need to consider the change management.

Step 2. Customer Strategy and Context

Analyse your customer journey to design your data collection process:

  • Which customers will you survey?
  • Which touch-points are important?
  • Where are your key opportunities to improve the business?

Step 3. Listen and Service Recovery

Listen: design your data collection survey and start collecting data.

Close the Loop: contact respondents within 48 hours to follow up on their feedback.

Step 4. Quick Wins

Implement some small, quick wins using the data you have collected.

Step 5. Big Bets

With the process validated, and proof that it works, you can move on to larger opportunities.

NPS Best Practices and Action Planning Resources

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