Net Promoter Score

Companies want to know whether their customers are satisfied. A very common method for this is the Net Promoter Score. Customers are asked exactly one question: How likely is it that you would recommend this product to a friend? The answer is given on a scale from 0 to 10. From all the answers, a single number is calculated, ranging from minus 100 to plus 100. This number is called the Net Promoter Score, or NPS for short.

Why companies rely on a single number

Satisfaction is hard to grasp. Long questionnaires yield many opinions but no clear result. The NPS compresses all of that into one number. This number can be compared over months. If it rises, something is going better; if it falls, there is a problem.

Comparing companies against one another is also popular. A streaming service can compare its value against that of its competitors. That is why the NPS frequently appears in quarterly reports and investor presentations. Some companies even tie executive bonuses to it.

The underlying idea: whoever actively recommends a product brings in new customers without advertising costs. Whoever badmouths it costs the company customers. Recommendations are considered a strong indicator of future growth. Whether this connection is really that close, however, is disputed among experts.

From the 0-to-10 scale to the final number

The answers are sorted into three groups. Anyone who gives a 9 or 10 counts as a promoter. Anyone who gives a 7 or 8 is considered passive and is completely ignored. All answers from 0 to 6 count as detractors. The boundaries are strict: a 6 already counts as criticism, even though in school it would be a mediocre grade.

Then you calculate the share of promoters minus the share of detractors. An example: 100 people respond, 50 give a 9 or 10, 20 give at most a 6. The rest fall in between. That makes 50 percent minus 20 percent, so an NPS of 30. The result is not a percentage, just a score.

This is exactly where the biggest weakness lies. Very different customer groups can produce the same value. A company with entirely mediocre ratings and a company with enthusiastic fans and furious detractors might end up with the same number. Anyone who only looks at the NPS won’t see this difference. That’s why many companies supplement the question with a free-text field for the reasoning.

Where you encounter the recommendation question

You have almost certainly encountered this metric before. After placing an order in an online shop, a short survey appears. After a chat with customer service, an email arrives with a scale from 0 to 10. Apps also display the question after a few weeks of use. It’s always the same one question.

In the tech industry, this value is especially prominent. Providers of business software regularly report it to investors. Providers of AI tools also use it to show that their chatbot resonates with users. News reports about rising or falling customer satisfaction often rely on this number.

A common mistake is comparing across industries. Banks and insurance companies typically achieve significantly lower values than streaming services. This is due to the industry, not necessarily the quality. So if you read an NPS figure in a report, it’s worth asking: Who was surveyed, how many people, and compared to what?