What is NPS in Market Research? | Net Promoter Score

September 4, 2016

Net promoter score (NPS) has become a commonly used metric in market research surveys. A relatively new metric about 5 years ago, NPS has now become a staple in customer satisfaction (CSAT) surveys across the globe. It provides an analyst with several benefits beyond the standard likert scaling question and is fairly easy to understand.

 

 

 

 

What is NPS and how is it calculated?

NPS is calculated by asking "how likely would you be to recommend this product to a friend or colleague on a 0 to 10 scale where 0 is not at all likely and 10 is very likely?" This question is nothing new, but how the answers are grouped after in analysis is what makes NPS. Add the percentage of those who selected "9" or "10" (very likely) and subtract out those who selected "1" through "6." This difference is your NPS. Scores can range from -100 to +100.

 

 

What do the 3 NPS groups mean?

NPS groups the scores into 3 distinct categories: (1) promoters, (2) passives, and (3) detractors. Promoters (those who rated you very likely to recommend - "9" or "10") are those who actively promote your brand in the community, brand advocates, per say. Passives (those who rated you somewhat likely to recommend - "7" or "8") are those who do not feel strong affinity to your brand and can be easily swayed by competitive offerings. Detractors (those who rated you not at all likely to recommend - "1" through "6") are those who actively detract from your brand in the community. They willingly offer up poor reviews and hurt your brand. Arguments can be made about the scaling (e.g., is 6 really a horrible score because the midpoint is 5) but nonetheless, this is how NPS is grouped.

 

 

Why is NPS so popular?

It's easy to comprehend. Subtracting the percentage of "1s" through "6s" from the "9s" and "10s" is an easy calculation. Because so many companies use this metric it is fairly easy to benchmark yourself against your competitors within your vertical or industry sector. A quick Google search on NPS will reveal all kinds of competitive benchmarks for you to compare your NPS. Likelihood to recommend has always been a popular question to ask in market research, NPS refreshes this concept a bit. Companies share the NPS rating across internal newsletters, its intranet, and flyers. It helps the company understand and benchmark performance year-to-year.

 

 

I have my NPS, now what?

The NPS School of VoC and CX teaches you that your focus should be on the passive audience (those rating likelihood to recommend a "7" or "8.") VoC training states efforts to convert the detractor audience (those rating you a "0" through "6") are not totally for naught, but requires a lot of work. From a business operations standpoint, the ROI is not as strong for your time. Whereas the passives can be more easily swayed into the promoter group (those rating you a "9" or "10.") Conduct further research on those who love your product or service and actively promote it to learn from them. Use this messaging to influence the passive group. By chance you may also sway some detractors up the ladder.

 

 

 

 

Drive Research is a market research company in Central NY offering services to clients all across the United States. Our range of market research services includes online surveys, phone surveys, focus groups, and mystery shopping. Have a question about market research or just need some advice on direction? Contact us at 315-303-2040 or email us at info@driveresearch.com.

 

 

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