NPS BASICS AND BEYOND
What’s So Special About the Net Promoter Score?
NPS DEFINED

What’s So Special About
the Net Promoter Score?

key takeaway

Net Promoter Score, NPS, is the most widely adopted, globally recognized, and time-tested measurement of customer experience performance, revealing loyalty and demonstrating proven links to behavior and financials. It is not the same as satisfaction.

Best Practice

NPS is the brand measure of the total customer journey, the sum of all parts, encompassing both the rational and emotional aspects of loyalty over the life cycle of the relationship. NPS measures customer loyalty and should be used to assess the overall customer relationship.

It is important to keep in mind that NPS is a relative, not absolute, performance measure. What matters more than your actual score is the score relative to your company and your industry, as well as the direction of movement and the proportion of customers and in category.

NPS is based on responses to the Likelihood to Recommend question, “How likely is it that you would recommend to a ?” It uses an 11-point scale, with 0 at the low end. Avoid any prompts such as color coding the scale or explanatory verbiage about what the scores mean; doing so introduces bias. This is critical to maintain the integrity of the question. NPS validity allows for benchmarking both within your organization and within your industry.

The score is calculated by subtracting the percentage of Detractors from the percentage of Promoters. While Passives are not directly mentioned, they do play a role in the calculation as the more Passives there are, the percentage of Promoters and Detractors is impacted. Thus, the Passive categorization is extremely valuable in setting customer strategy and focusing action.

 

% of Promoters – % of Detractors = NPS

At its core NPS is about separating customers into 3 categories that behave differently and deliver different economic outcomes. Research going back to the origins of NPS continues to validate the distinct behaviors of these 3 designations. The fact that these categories are directionally correct and are easy to understand drives employees at all level of the organization to take appropriate action and monitor shifts in status across the 3 categories, ultimately improving NPS.

Promoters (scores of 9 -10) these are your most loyal customers. They are the most profitable, spending more and staying longer. Their cost to serve is low. The positive word of mouth spread by Promoters reduces acquisition costs and drives growth. They are open to partnering with you
on innovation.

Passives (scores of 7-8) The risk represented by Passives is often overlooked. While not at immediate risk of churn, their ambivalent connection to your brand makes then highly susceptible to offers by your competition. They are very price conscious impacting profitability. Passives are unlikely to spread positive word of mouth so provide little value in acquisition efforts.

Detractors (scores of 0-6) These are your highest risk customers, not only in terms of potential to churn but potential to cause damage to the brand. Cost to serve is high. Negative word of mouth impacts acquisition efforts.

go beyond basic nps metrics and scales

Foundational practices related to NPS metrics look primarily at data you get when seek direct feedback from customers. It’s limited by response rates – a problem that only gets worse over time – and response bias. Taking metrics to the next level means transforming robust, always-on streams of operational data into calibrated, AI-created scores, so that you have a personalized Net Promoter Score for every customer based on their ongoing interactions with your company. To get there, download our guide, take our comprehensive training course, or read about the future of NPS.

REPORT

The Complete Guide to NPS Basics and Beyond

TRAINING

Leading an Outcome- Oriented
CX Program

REPORT

The New NPS
Manifesto

REPORT

The Complete Guide to NPS Basics and Beyond

TRAINING

Leading an Outcome- Oriented
CX Program

REPORT

The New NPS Manifesto

ABOUT OCX COGNITION

OCX Cognition delivers the future of NPS. We ensure customer experience success by combining technology and data science with programmatic consulting. In our Insights section, we present a comprehensive and evolving collection of resources based on our research and expertise, collected for CX leaders committed to delivering business outcomes.