Watch the video version of this article here: 【NPS】Net Promoter Score explanation and calculation _ Bilibili
Source#
NPS (Net Promoter Score) was first proposed by Bain & Company’s Fred Reichheld in the 2003 Harvard Business Review article “The One Number You Need to Grow” The One Number You Need to Grow. It was designed to measure customer loyalty.
Reichheld F F. The One Number You Need to Grow[J]. Harvard business review, 2003, 81(12): 46-55.
Meaning#
Question Design#
“The top-ranking question was far and away the most effective across industries: •How likely is it that you would recommend \[company X\] to a friend or colleague?
Two questions were effective predictors in certain industries: • How strongly do you agree that \[company X\] deserves your loyalty? • How likely is it that you will continue to purchase products/services from\[company X]?
Other questions, while useful in a particular industry, had little general applicability: • How strongly do you agree that \[company X] sets the standard for excellence in its industry? • How strongly do you agree that \[company X] makes it easy for you to do business with it? • If you were selecting a similar provider for the first time, how likely is it that you would you choose \[company X]? • How strongly do you agree that \[company X] creates innovative solutions that make your life easier? • How satisfied are you with \[company X’s] overall performance?” (Reichheld, 2003, p. 5)
The top-ranking question was by far the most effective across industries: • How likely are you to recommend \[Company X] to a friend or colleague?
The following two questions were effective predictors in certain industries: • To what extent do you agree that \[Company X] deserves your loyalty? • How likely are you to continue purchasing products/services from \[Company X]?
Other questions, although useful in specific industries, had weaker general applicability: • To what extent do you agree that \[Company X] sets the standard for excellence in its industry? • To what extent do you agree that \[Company X] makes it easy for you to do business with it? • If you were choosing a similar provider for the first time, how likely would you be to choose \[Company X]? • To what extent do you agree that \[Company X] creates innovative solutions that make your life easier? • How satisfied are you with \[Company X]’s overall performance?
Basis for Customer Classification#
“For these reasons, we settled on a scale where ten means “extremely likely” to recommend, five means neutral, and zero means “not at all likely.” When we examined customer referral and repurchase behaviors along this scale, we found three logical clusters. “Promoters,” the customers with the highest rates of repurchase and referral, gave ratings of nine or ten to the question. The “passively satisfied” logged a seven or an eight, and “detractors” scored from zero to six.” (Reichheld, 2003, p. 6) For these reasons, the scale was set so that 10 means “extremely likely” to recommend, 5 means neutral, and 0 means “not at all likely” to recommend. When customer referral and repurchase behavior were examined along this scale, three logical clusters appeared. “Promoters” are the customers with the highest repurchase and referral rates; they give the question a score of 9 or 10. The “passively satisfied” give a score of 7 or 8, and “detractors” score from 0 to 6. ![[Pasted image 20250119103405.png]]
Calculation Method#
“Calculate: the percentage of customers who respond with nine or ten (promoters) and the percentage who respond with zero through six (detractors). Subtract the percentage of detractors from the percentage of promoters to arrive at your net-promoter score.” (Reichheld, 2003, p. 8) Calculate the percentage of customers who respond with 9 or 10 (promoters) and the percentage who respond with 0 through 6 (detractors). Subtract the percentage of detractors from the percentage of promoters to get the Net Promoter Score.
$$ \text{NPS} = \frac{\text{Number of promoters} - \text{Number of detractors}}{\text{Total number of customers}} \times 100 $$
Demonstration#
Questionnaire Survey#
Many questionnaire platforms include an NPS option.
A follow-up reason-type question is usually added after it for more detailed explanation, such as: Why do you not recommend xx?
Excel Calculation#
Formula Calculation#
Assume that the data column is A2 to A101, and classify respondents as promoters, passives, or detractors.
=IF(A2>=9, "Promoter", IF(A2>=7, "Passive", "Detractor"))- If the value in cell A2 is greater than or equal to 9, return “Promoter”, meaning the rating is high and the willingness to recommend is strong.
- If the value in cell A2 is greater than or equal to 7 and less than 9, return “Passive”, meaning the rating is moderate: neither actively recommending nor opposing.
- If the value in cell A2 is less than 7, return “Detractor”, meaning the rating is low and the customer does not recommend or opposes recommending.
Count the three types of customers:
=COUNTIF(B2:B101, "Promoter")
=COUNTIF(B3:B101, "Passive")
=COUNTIF(B4:B101, "Detractor")Calculate the ratio:
=((COUNTIF(B2:B101, "Promoter") - COUNTIF(B2:B101, "Detractor")) / COUNTA(A2:A101)) * 100$$ \text{NPS} = \left( \frac{\text{Number of promoters}}{\text{Total number of customers}} - \frac{\text{Number of detractors}}{\text{Total number of customers}} \right) \times 100 $$
$$ \text{NPS} = \frac{\text{Number of promoters} - \text{Number of detractors}}{\text{Total number of customers}} \times 100 $$
