Every business seeks a reliable way to measure customer satisfaction and loyalty. The Net Promoter Score (NPS) is a powerful metric that summarizes the customer experience into a single, understandable number. It is based on a fundamental question:
"On a scale of 0 to 10, how likely are you to recommend our product (or service) to a friend or relative?"
Developed in 2003 by Fred Reichheld, Bain & Company, and Satmetrix, NPS is rooted in the premise that a business's growth is directly related to a customer’s willingness to promote or recommend its products or services.
Respondents are categorized into one of three groups based on their rating:
Promoters (9–10 ratings): Loyal enthusiasts who are likely to recommend the business and are valuable assets.
Passives (7–8 ratings): Satisfied but not necessarily loyal and may be easily swayed by competitors.
Detractors (0–6 ratings): Unhappy customers and likely to spread negative feedback, which can harm the business's reputation.
💡 Understanding the Core Truths About Net Promoter Score
The NPS formula, NPS = % Promoters - % Detractors, intentionally forces companies to focus on creating genuine loyalty. To leverage this metric fully, you must understand three key truths:
The Satisfied Customers Who Gave 7s or 8s Don't Count.
These individuals are designated as Passives. They are satisfied with the service, but are not necessarily enthusiastic or loyal. Crucially, Passives represent a significant churn risk and are easily swayed by competitive offerings. In the official NPS calculation, the entire Passive segment is ignored, meaning their feedback has zero direct impact on the final score.
This intentionally forces companies to focus intensely on moving beyond simple contentment to create true Promoters - loyal enthusiasts who will actively advocate for the brand.
A Score of 6 is just as Bad as a 0.
The NPS framework categorizes customers who respond with a score of 0-6 as Detractors. These unhappy customers pose an active threat to the brand through potential negative word of mouth. What is counterintuitive is that a customer who gives a score of 6 is weighted the same as one who gives a score of 0. Both subtract equally from your final score, signaling that any Detractor requires immediate attention and corrective action.
The Score Isn't a Percentage; It's an Absolute Number.
A common misunderstanding is that the final NPS is expressed as a percentage. In reality, the NPS is an absolute number that can range from -100 to +100. For example, if 70% of respondents are Promoters and 10% are Detractors, the resulting NPS is 60 (70 - 10). An NPS higher than zero is generally considered good, while a score of +50 is often regarded as excellent.
🔢 Calculate NPS in Halo Reports
If a 0-10 ratings ‘recommendation’ question is included in your study, leverage the Recode feature in Halo Reports to calculate the Net Promoter Score.
Step-by-Step Procedure
Define the Segments: Create a new recode and assign the ratings to the three segments:
Promoters: 9 and 10 ratings
Passives: 7 and 8 ratings
Detractors: 0 through 6 ratings
Assign Statistical Values: Assign the corresponding statistical value to the new definitions:
Promoters: 100
Passives: 0
Detractors: -100 (Note: Passives are assigned a value of zero because this entire customer segment is ignored in the calculation).
View the Results: The NPS value in the Halo Reports Crosstab results is displayed as a mean value (with decimals). To display the NPS as a whole number, go to User settings, select the Results tab, and change the Numeric statistics to display 0 decimal places. This value is the actual NPS score.
📈 Beyond the Score: Continuing Your Analysis
Calculating your NPS is merely the first step; it is not the final goal. The true power of this metric lies in using the data to take corrective action and make informed decisions. The score itself is a "bottom line" tracking metric, while the feedback that drives it is what facilitates actual improvement.
To maximize your NPS program, focus on key actions.
Segment the Data: Break down results by demographics or product lines to identify specific areas needing improvement.
Take Corrective Action: Reach out to Detractors to address their concerns, and engage with Passives to discover what is needed to convert them into enthusiastic Promoters.
Track and Benchmark: Regularly monitor your score over time and compare it against industry standards to gauge performance.
Reward Loyal Customers: Identify Promoters and reward their loyalty to transform them into active advocates.
With the analysis and capabilities of Halo Reports and by recognizing how the Promoter, Passive, and Detractor segments operate, you can transform NPS from a single metric to a customer-centric operating model built on genuine loyalty.
