What is Net Promoter Score (NPS)?
A loyalty metric that measures the likelihood of customers recommending your business to others, based on a single-question survey.
Detailed Explanation
Net Promoter Score is calculated from responses to the question "How likely are you to recommend [company] to a friend or colleague?" on a 0-10 scale. Respondents are classified as Promoters (9-10), Passives (7-8), or Detractors (0-6). The NPS is the percentage of Promoters minus the percentage of Detractors, yielding a score between -100 and +100. NPS is valued for its simplicity and its correlation with business growth — companies with high NPS tend to grow faster through word-of-mouth referrals. Follow-up questions asking "why" provide qualitative insights that explain the score and guide improvements.
Why It Matters
NPS measures something deeper than satisfaction — it measures whether customers are willing to put their own reputation on the line by recommending you. Detractors do not just leave; they actively discourage others from using your business. Understanding and improving your NPS directly impacts organic growth.
Example
An Australian accounting firm surveys clients annually and discovers their NPS is +15 — decent but not great. Analysis shows that Detractors consistently cite poor communication during tax season. By implementing proactive status updates and a client portal, their NPS climbs to +52 the following year, and referral-based new clients increase by 40%.
Related Terms
A metric that measures how satisfied customers are with a product, service, or interaction, typically on a numerical scale.
A measurable value that demonstrates how effectively an organisation or individual is achieving key business objectives.
A predictive metric that signals future performance, allowing proactive intervention before outcomes materialise.
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