Net Promoter Score (NPS) is a straightforward customer loyalty metric that ranks how likely clients are to recommend a company to others. Respondents answer on a 0-10 scale, with scores of 9-10 classified as "Promoters," 7-8 as "Passives," and 0-6 as "Detractors." The final NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters, yielding a score between -100 and +100. This single metric has become a standard tool for assessing customer satisfaction and predicting business growth.
How It Works
The NPS survey is typically a brief questionnaire asking one primary question: "How likely are you to recommend us to a friend or colleague?" Some companies add follow-up questions to understand why customers gave their scores. The simplicity is intentional—it takes seconds to complete and produces comparable data across industries and time periods. Companies track NPS regularly to monitor trends and identify which customer segments are most or least satisfied.
Why It Matters for Investors
For angel investors evaluating startups, NPS serves as a reality check on management claims. A high NPS indicates customers genuinely value the product and will voluntarily promote it, reducing future customer acquisition costs. Conversely, a declining NPS is an early warning signal that product-market fit may be deteriorating. Unlike vanity metrics such as user signups, NPS reflects actual customer satisfaction and correlates strongly with retention, revenue growth, and customer lifetime value. When reviewing investment opportunities, requesting NPS data reveals whether a company has achieved sustainable competitive advantage through customer loyalty rather than just burning through marketing budgets.
Example
A B2B SaaS startup reports an NPS of 65, with 70% Promoters and 5% Detractors. This score indicates strong customer satisfaction and suggests existing clients will drive referral-based growth. Compare this to a competitor with an NPS of 15—despite potentially similar revenue, the first company has superior unit economics and lower churn risk, making it the more attractive investment opportunity.
Key Takeaways
- NPS measures customer willingness to recommend, calculated as % Promoters minus % Detractors on a 0-10 scale
- Scores above 50 indicate strong loyalty; negative scores signal serious problems requiring immediate attention
- High NPS predicts lower customer churn, stronger product-market fit, and sustainable growth
- Use NPS as a due diligence tool to validate founder claims and assess competitive positioning before investing