What would you do if you had an honest conversation with your customers, where they tell you exactly how they feel about your business and whether they are willing to recommend it to others? Wouldn’t it be invaluable to know this information? Well, if you’re considering that opportunity, the Net Promoter Score (NPS) will be your supporting metric, designed to capture the level of loyalty of your customers and understand how well you’re meeting their expectations.
We know that recommendations and shared experiences are more influential today than ever, and NPS acts as that listening metric for your customers that allows you to understand what matters to them and act accordingly.
In this article, we explain what the Net Promoter Score is, how to calculate it and, most importantly, how you can leverage this metric to strengthen your relationship with your customers and improve your business strategy. Because true loyalty is not bought, it’s earned. Want to find out how loyal your customer base is and how you can take your business to the next level? Let’s get started!
Net Promoter Score Definition
The Net Promoter Score is a metric designed to measure customer loyalty to a brand, product, or service. It was introduced in 2003 by Fred Reichheld in his book The Ultimate Question and quickly became a standard for evaluating customer experience.
How is it measured?
The NPS is based on a question: “How likely are you to recommend [our product/service] to a friend or colleague?”
Customers respond on a scale of 0-10, and based on their score, they are classified into three categories:
- Promoters (9-10): are loyal, satisfied customers who will not only recommend your product, but will also continue to buy and advocate for your brand.
- Passives (7-8): satisfied customers, but not committed enough to actively recommend you.
- Detractors (0-6): dissatisfied customers who may abandon your brand and share negative reviews.
Formula for calculating NPS
The calculation of this metric is simple:
The result can range from -100 (all customers are detractors) to +100 (all are promoters). A positive NPS indicates that you have more promoters than detractors, which is generally a good sign.
Example: if out of 100 responses you receive 60 promoters, 20 passives and 20 detractors:
This NPS of +40 shows that your brand has a good proportion of satisfied and loyal customers.
Advantages of using the Net Promoter Score
The popularity of the Net Promoter Score lies in its simplicity, and at the same time, its ability to provide strategic insights to make decisions in certain areas of the business. Let’s take an in-depth look at the advantages offered by the NPS, and how they can positively impact the sustainability and growth of your company.
1. Simplicity and ease of implementation
As we announced, one of the biggest advantages of NPS is its simplicity. Unlike other complex metrics, the NPS is based on a single question that can be implemented in digital surveys, forms or direct interactions with customers. This makes it an accessible tool for companies of all sizes, from startups to large corporations.
Why it’s important:
- Speed of data collection: the brief and straightforward nature of the NPS question makes it easy to include at multiple points in the customer lifecycle, from onboarding to post-sales support.
- Ease of analysis: by grouping customers into promoters, passives and detractors, NPS provides a clear, segmented view that does not require advanced technical knowledge to interpret.
2. Measuring customer loyalty effectively.
NPS goes beyond measuring immediate satisfaction; it assesses long-term loyalty. While other metrics such as satisfaction surveys focus on specific interactions, NPS reflects the customer’s willingness to recommend your product or service, which is a stronger indicator of emotional connection to your brand.
Why it’s vital:
- Predicting future behavior: promoters are more likely to remain loyal, purchase additional products and recommend the brand, while detractors may be at risk of abandoning the service.
- Focus on sustainable relationships: identifying loyalty allows companies to develop strategies that foster long-term relationships rather than focusing solely on one-off transactions.
3. Identifying opportunities for improvement
The NPS provides a score, and is also often accompanied by open-ended questions that allow customers to express their opinions and suggestions. This qualitative feedback complements quantitative metrics, providing a more complete picture of areas that need attention.
Benefits:
- Prioritization of critical issues: feedback from detractors pinpoints specific problems that require immediate solutions, such as customer service failures or technical problems.
- Data-driven innovation: feedback from promoters and passives can inspire new ideas for products, services, or customer experience improvements.
4. Benchmarking and industry competitiveness
NPS is a widely used metric, which allows companies to compare their performance with that of other players in their industry. This not only helps identify competitive gaps, but also allows setting clear and realistic goals.
How it works:
- Comparisons to industry averages: many industries have NPS standards that companies can use as a benchmark to evaluate their market position.
- Identifying strengths and weaknesses: comparing NPS with direct competitors reveals areas where your company excels or needs to improve.
5. Promoting a customer-centric culture
NPS also fosters a cultural change within the organization. So by implementing it as a core KPI, companies can align all teams around a common goal: improving customer loyalty.
Why it’s transformative:
- Shared focus: all departments, from sales to support, can work together to improve NPS, promoting collaboration and innovation.
- Collective responsibility: sharing NPS results with all levels of the organization ensures that every employee understands their role in improving the customer experience.
Improvements with Net Promoter Score.
The NPS also acts as a catalyst for implementing improvements in multiple aspects of a business. From identifying critical issues to fostering a customer-centric culture, NPS provides insights that can transform customer experience and business performance.
Let’s take a deeper dive into how companies can use NPS to achieve improvements, optimize strategies and strengthen their relationship with customers.
1. Act on customer feedback
The NPS is an opportunity to listen to customers and understand what they are doing well and what can be improved. When accompanied by open-ended questions such as “What got us to this score?”, or “What can we do better?”, the NPS acts as a diagnostic tool that identifies specific areas for improvement.
Benefits:
- Identification of recurring problems: detractors’ comments often point out critical problems, such as deficiencies in technical support, complicated processes or product quality issues.
- Uncovering opportunities: promoters, in addition to praising what works, frequently share ideas and suggestions that can inspire innovations.
- Prioritization of actions: by analyzing the responses, companies can prioritize the improvements that will have the greatest impact on the customer experience.
Improve loyalty and reduce churn.
NPS segments customers into promoters, passives and detractors, allowing personalized strategies to be designed for each group. This is useful for reducing churn, as it provides a map of who is at risk of dropping out and why.
NPS-based strategies:
- Retention of detractors: implement specific programs to address the issues noted by detractors and convert them into loyal customers. For example, offering discounts or personalized support can change their perception.
- Promoter loyalty: Promoters are natural brand advocates. Rewarding them with referral programs or exclusive access to products reinforces their loyalty.
- Engagement of passive customers: Passive customers, although satisfied, are not sufficiently engaged. Incentivize them with educational content, value demonstrations or personalized promotions.
Business impact: a study by Bain & Company shows that companies with high levels of retention and loyalty experience more stable growth and reduce the costs associated with acquiring new customers.
3. Optimize processes and operations
NPS insights can also illuminate internal inefficiencies that affect brand perception.
Applications:
- Process simplification: if customers complain about complicated steps in onboarding or web navigation, it’s a sign that these processes need to be optimized.
- Support improvements: comments related to wait times or lack of resolution in technical support can guide the implementation of tools such as chatbots or trainings for the team.
- Expectation management: complaints about mismatches between marketing promises and product reality can lead to revising advertising messages and product features.
4. Drive organic growth through referrals
Promoters, those customers who rate 9 or 10 on the NPS scale, are valuable assets to any business. In addition to being loyal, they are also more willing to recommend your brand to others. Companies can capitalize on this willingness to generate organic growth.
How to leverage advocates:
- Referral programs: incentivize advocates to invite new customers by offering them rewards such as discounts, exclusive access or additional benefits.
- Success stories: use testimonials from advocates to build trust in your brand and attract new customers.
- Brand ambassadors: identify the most active promoters and turn them into official brand advocates through ambassador programs.
Impact: According to a Nielsen report, 92% of consumers trust recommendations from people they know more than any other form of advertising. This makes promoters a tool for growth.
5. Foster a customer-centric organizational culture.
Implementing NPS as a core metric across the enterprise fosters a cultural shift where every team, from sales to product development, is focused on improving the customer experience.
How to achieve it:
- Share results: present NPS results to all levels of the organization to ensure that every employee understands its impact on the customer experience.
- Set common goals: make NPS a central KPI across all areas of the business, promoting collaboration to improve this metric.
- Internal recognition: celebrate NPS-related achievements to motivate teams, such as a raise or positive customer feedback.
6. Attract and retain investors
NPS is also a valuable indicator for investors. A high value reflects a loyal and satisfied customer base, which increases confidence in the stability and growth potential of the business.
Advantages for investors:
- Revenue stability: high customer loyalty means lower churn rate, ensuring more predictable recurring revenues.
- Expansion potential: promoters are a solid foundation for growth through upselling, cross-selling and referrals.
- Brand reputation: a high NPS is a sign that the company is well positioned in its market and has a sustainable competitive advantage.
Impact: many startups use NPS as a key metric in their pitch decks to demonstrate that they have a solid base of satisfied customers, which makes it easier to attract investors.
NPS in different industries
The implementation of the Net Promoter Score and its average scores vary by industry due to differences in customer expectations, buying cycles and service experiences. Let’s look at how the NPS adapts to different industries, the average standards in each sector, and the particular challenges companies face when measuring customer loyalty.
1. SaaS industry: measuring loyalty in the digital world
In the Software as a Service (SaaS) industry, NPS is a critical metric. SaaS companies operate under a recurring revenue model, so customer retention is essential for business sustainability. Here, NPS is used to assess both overall satisfaction and customer success in relation to the product.
SaaS NPS averages:
- Typical scores in this industry range from 30 to 40, although leading companies may exceed 50.
- Promoters tend to be advanced users who find high value in the software’s features, while detractors may point to problems with the interface or learning curve.
Specific challenges:
- Technical churn: many detractors in SaaS stop using a product due to lack of adequate training or insufficient support.
- Limited customization: customers expect solutions tailored to their needs, which can be difficult to implement on a large scale.
Example: Slack uses the NPS to assess how teams integrate the tool into their workflow. This allows them to adjust features and improve the user experience, which has contributed to their high loyalty score.
2. E-commerce: building loyalty in a saturated marketplace
In e-commerce, NPS is primarily used to measure the shopping experience, from website navigation to product delivery. This sector has a particular focus on immediate satisfaction, as purchase cycles are often short and customers can quickly switch suppliers if they are not satisfied.
Average NPS in e-commerce:
- The average NPS range in this industry is usually between 30 and 50, depending on the quality of service and delivery.
- Promoters value fast delivery times, ease of use of the website and transparent return policies, while detractors regularly point to logistical problems or lack of communication.
Specific challenges:
- Logistics: delivery issues are a common cause of detractors.
- Fierce competition: customers have multiple choices, so even small glitches can negatively impact NPS.
Example: Amazon constantly monitors its NPS to identify weaknesses in the shopping experience, such as delivery delays or unsatisfactory products. Thanks to its focus on logistics and customer service, it remains among the industry leaders.
3. Banking and financial sector: rebuilding trust
The financial sector historically faces challenges in terms of customer loyalty and satisfaction due to perceived bureaucratic processes or lack of transparency. In this context, NPS is used to measure customer trust and satisfaction in areas such as customer care, digital experience and personalized services.
NPS averages in banking:
- In general, scores are lower in this industry, ranging from 10 to 30.
- Promoters excel at receiving prompt attention and effective solutions, while detractors often complain of slow processes and unexpected charges.
Specific challenges:
- Lack of differentiation: many banks offer similar services, making it difficult to stand out.
- Outdated technology: lack of modern digital experiences can lead to frustration.
Example: BBVA has adopted NPS as a core metric to measure the digital experience of its customers, using the insights to optimize its mobile app and online customer service processes, thus achieving an increase in brand awareness.
4. Healthcare: measuring quality of care
In the healthcare industry, NPS is used to assess the patient experience, from interaction with medical staff to clarity of information provided. Loyalty in this sector is strongly influenced by trust in providers and the quality of care received.
Average NPS in healthcare:
- Scores vary widely, with an average range between 20 and 40.
- Promoters tend to highlight staff empathy and speed of service, while detractors criticize waiting times or lack of clear information.
Specific challenges:
- Customer sensitivity: negative experiences have a stronger emotional impact in this industry.
- Variability in quality: perceptions of quality can vary by provider.
Example: Kaiser Permanente, a U.S. healthcare provider, uses the NPS to identify areas for improvement in patient care, achieving greater satisfaction and confidence in its services.
5. Automotive: building loyalty
In the automotive industry, NPS also helps measure the buying experience and after-sales service. Long-term loyalty is imperative in this sector, as repurchasing a vehicle or recommending a customer depends on a comprehensive experience.
Automotive NPS averages:
- Average scores range from 20 to 50, depending on vehicle quality and customer service.
- Promoters tend to rate product reliability and prompt service, while detractors point to mechanical problems or lack of proper attention at dealerships.
Specific challenges:
- Consistency of service: experience may vary between dealerships.
- High expectations: customers expect quality products and services for the associated high cost.
Example:Tesla has excelled in using NPS to measure customer loyalty and continuously improve both its vehicles and the shopping experience, achieving scores above the industry average.
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Every promoter has something to say about your product or service, and listening to those voices can transform your business.
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Conclusions
The Net Promoter Score is a very accessible metric with a profound impact, which is not only limited to monitoring customer satisfaction, but also their willingness to recommend your brand, an indicator of loyalty and trust.
But the most valuable thing about NPS is not the number it yields, but the stories behind the data. Every promoter, passive, or detractor has something to say about your product or service, and listening to those voices is what can really transform your business. Leveraging the qualitative feedback that accompanies NPS allows you to identify areas for improvement, innovate your offerings, and ultimately strengthen the customer experience.
Remember that when implementing NPS more than measuring, it’s about acting. A low score is not a cause for alarm, but an opportunity to adjust to your customers’ expectations. Similarly, a high score should not be a cause for complacency, but a foundation on which to build even stronger strategies to build loyalty and expand your promoter base.
