NPS: An Explanation and its Importance
28 May 2020

Retaining a customer is five times cheaper than acquiring a new customer – that is why brand loyalty is crucial. While we know its value, how do you measure brand loyalty? Often by using the measuring technique, Net Promoter Score (NPS), is an important indicator of success.

NPS is a rating on a scale from -100 to 100. It informs how likely a consumer is to recommend a product or service to a colleague or a friend. This powerful number has a surprising history and can go a long way to inform brand strategy.

History of NPS

In a 2003 article for Harvard Business Review, Net Promoter Score was devised by Frank Reichheld, a fellow of the consultancy firm Bain & Company. He also continued his exploration of and correlation to success in the book The Ultimate Question 2.0 (co-authored with fellow Bain & Company employee Rob Markey).

What makes this score so important? To paraphrase what Reichheld wrote in his original article;

Loyalty by a customer is about more than just reoccurring purchasing. Even if someone buys over and over, they may not be loyal. They might be doing so out of indifference or barriers to exit. 

For this reason, loyalty must be measured by recommendation. A loyal customer will not only re-purchase but they will promote the brand among friends, family, and colleagues. By doing so, they are not only saying they will re-purchase, but they are putting their reputations on the line. 

NPS asks about likelihood to recommend. In other words, NPS measures not just whether a customer is buying a product consistently, but if they feel strongly enough about the product to risk how others view them to recommend the product or service. It’s both an indicator of brand usage and resonance.

What Makes NPS Beneficial

Reichheld links the score to company growth and success. NPS is a great company indicator, and it’s also a yardstick to compare to competitors and other industries. Understanding your own brand’s Net Promoter Score compared to direct competitors can show how you stack up in terms of loyalty. 

In addition to just your competitors, it’s essential to see how your industry’s NPS stacks up to other sectors to get a full contextual understanding of not only loyalty to your brand but relative to other brands/industries. For example, cable companies often rate much lower on average than other businesses, so a cable company may have a particularly low NPS but it may be higher than competitors. Knowing where it places among competitors and then among other industries allows for a fuller picture.

Calculation of Net Promoter Score

To calculate a brand’s net promoter score, respondents are asked to rate how likely they are to recommend the product/service to a friend or colleague on a scale of 0 to 10. After the data is collected, answers are grouped into three; detractors (answered 0 to 6), passives (answered 7 or 8), and promoters (answered 9 or 10). Further, the percentage of respondents who are detractors is subtracted from the percentage of promoters. Finally, that percentage is taken as a whole number, giving us an NPS.

Ways to Utilize NPS

One way to utilize NPS changes is by conducting a benchmark study to highlight how a brand is either progressing/regressing. An annual tracker that highlights Net Promoter Score for both the brand and its competitors gives a great view of changes in the market. Just the score itself is a view into how brands stack up.

What drives the score is essential to understand. Often, areas of the company, such as purchase process, customer service, and different product/service attributes, impact the score. By analyzing multiple attributes for your brand and the competition, you can tell what your brand is doing better and worse among the competition. You can also conduct correlations to determine what is driving each score.

Another way to use NPS is to isolate high propensity users based on demographics/answers to other questions in your survey. For example, maybe your company performs better among users from urban areas instead of suburban. Or possibly, if your product is online software, those that primarily use your software for one feature rate you higher or lower. Or even if users had issues signing up for your product, how that affects NPS, and if a big enough group of people are affecting your score due to one issue. This is the power of NPS.

NPS is a robust market research tool that can be used in conjunction with others. It is not the be-all and end-all, but it can help your company spot issues upfront and increase loyalty. 

If your company is interested in an NPS study or other market research, please reach out to [email protected], and we will be happy to schedule a call to discuss the research objectives with you.

In addition, check out Provoke Insights research services here.

Read some of our recent case studies and blogs here:

  1. COVID-19 and Conducting Market Research
  2. Sunpower: An NPS and Competitive Assessment Study
  3. Segmentation and Finding Your Target Audience

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COVID-19 and Conducting Market Research
18 May 2020

COVID-19 Impact on Market Research

In these unprecedented times, ‘business as usual’ is not always the case. At Provoke Insights, we are continually committed to providing you with the highest quality strategy and research. 

As our company has always supported our team working-at-home for a couple of days of the week, the transition to working virtually entirely has not been an issue. Our colleagues meet multiple times throughout the day to provide statuses on projects and give feedback and assist in initiatives.

We would be lying if we said COVID-19 has not impacted market research. However, at Provoke Insights, our agile approach has allowed us to adapt quickly. We are also continually assessing how we can develop the most effective research during these changing times.  

In-Person Research

Focus groups and in-person in-depth individual interviews have come to a halt due to the need for social distancing. At Provoke Insights, while we conduct online qualitative often, we have recently had to transfer an offline 30-focus-group project online in just a few days to online due to COVID-19. 

The virus impacts the recruitment process for online focus groups. The show-rate is much lower than the average show-rate (before the pandemic). Some of the causes are the following:

  • Essential workers such as warehouse and supermarket staff are often called in for extra hours at the last minute.
  • Parents had difficulty finding childcare as kids no longer had school or any daycare.
  • Overall, people are stressed due to income strain.
  • Some had to pull out as they fell ill due to the virus.
  • Participants under the age of 25 years old are less responsive, as many are undergoing an unusually large transition, moving home from college back into their parents’ homes.

At Provoke Insights, we have put the following procedures in place:

  • Over-recruit the number of participants per group by a significant amount
  • Additional reminders for those whom we recruit
  • Higher incentives to improve show-rate

Using Technology During Online Qualitative

Participants’ WIFI service may be slow due to high usage, or specific audiences are not very technologically savvy. As a result, at Provoke Insights, we take the target audience into account. For particular audiences, we recommend using qualitative technology that does not require high-speed wifi or is not too complicated.

The Research Topic & Questions   

COVID-19 is on many people’s minds, and it impacts the way people respond to questions. When developing guides and questionnaires, you need to understand the objective of the research and look at feedback regarding how the world is currently or diving into insights that are more long-term. Consequently, it is more important than ever to write questions smartly to understand the bigger picture rather than focus solely on the immediate environment. We review all initiatives to ensure that the current climate will not impact the project’s results. 

Refreshing Findings

While in a ‘normal’ year, it is crucial to update your research and findings to see if behaviors and the market have changed. This year, it is especially essential to understand that the research you may have conducted last year may no longer be relevant. Consumers’ mindsets are changing, and the way they behave will shift over the next few months.

If you are considering researching during this time, please reach out to Provoke Insights to address any concerns you may have. You can reach us using the contact page or by emailing [email protected]

In addition, check out Provoke Insights research services here.

Sunpower: An NPS and Competitive Assessment Study
18 May 2020

Background & Marketing Problem

Sunpower is a top solar panel company with retail in over 20 countries worldwide. Founded in 1985, the American energy company has manufactured solar panels for 35 years. The manufacturer was one of the first solar power companies, coming as a result of research conducted at Stanford University. In need of understanding their place in the solar power marketplace, Sunpower was looking for an NPS study.

Sunpower approached Provoke Insights to conduct an annual survey on the solar consumer purchase journey. Already a leader in the field, the company wanted to better understand its standing compared to the competition. The provider wanted to identify any competitive advantages and contemplate improvement efforts. In addition, an economic model was developed as a result of the research. Finally, the company wanted to gain a better understanding of its top competitors, as well as determine essential awareness, purchase, satisfaction, and referral drivers.

Market Research Solution

One of the best ways to understand how customers view your company’s product is through Net Promoter Score (NPS). NPS is a score that ranges from -100 to 100, which measures how likely a consumer is to recommend a product to a friend. The method helps measure both success and brand loyalty. NPS changes conducted over a period of years also helps highlight how a brand is either progressing/regressing in terms of its product’s reception.

Provoke Insights developed and conducted a 30 minute, 80 question survey among solar power customers with solar panels installed on their roofs. Accordingly, the survey was sent to both customers of Sunpower and its competitors. Further, a structural equation model was used to determine which attributes were drivers of NPS score and by how much.

Results of the Research

A comprehensive report was developed that provided a clear understanding of the market, and how the solar panel company compared to the competition. The annual analysis gave Sunpower a yearly benchmark to compare their position versus competitors in the market. In addition, the analysis helped Sunpower understand what drives awareness, and sales, and how to challenge the competition.

The information was used to drive key decisions in marketing, customer services, and the sales process. You can read more about the research here: