Net Promoter Score

NPS gauges customer satisfaction and loyalty by asking how likely customers are to recommend the product or service to others. One question, answered on a scale, converted into one number.

Customers who answer 9 or 10 are promoters. Customers who answer 6 or lower are detractors. The score is the percentage of promoters minus the percentage of detractors.

A high NPS implies a strong brand reputation and customer advocacy — which, for a young company, is the cheapest form of growth there is.

The arithmetic hides a design choice worth understanding. Respondents who answer 7 or 8 are counted in neither group, but they remain in the denominator when the two percentages are worked out. They dilute the score without being able to raise it, which is why NPS is a demanding measure: indifference is treated as a failure to create an advocate.

Because the answer is a subtraction of percentages, the score runs from -100 (every respondent a detractor) to +100 (every respondent a promoter), and it is quoted as a plain number rather than as a percentage.

NPS sits in the workbook's revenue growth and customer retention group, beside churn rate, DAU/MAU, CLTV and CAC, and it connects to the one metric that turns advocacy into arithmetic: the viral coefficient, which represents the degree of exponential growth a company experiences, measured from the number of referrals sent per user, the conversion rate of those referrals and the total number of current users. NPS asks whether customers would recommend; the viral coefficient counts what happened when they did.

NPS = % of promoters (score 9 or 10)
      - % of detractors (score 6 or lower)

Passives (7 or 8) count in the base but in neither group.
Range: -100 to +100.

Meghna Health, a diagnostics platform raising Rs 25 crore, surveys 4,000 users.

NPS = 55% - 20% = 35

Not 55, and not 35%. 35, on a scale from -100 to +100.

Notice how much the 1,000 passives cost. Had 600 of them been promoters instead, the score would be 50 on identical revenue and identical churn. Nothing about the business changed; the distribution of enthusiasm did.

Now the fund reads it alongside the rest of the metric set:

A good NPS with high churn usually means people like the product and stop needing it. That is a market-size problem, not a satisfaction problem — and it is the kind of contradiction a single metric can never surface on its own.

Chapter 14 (Valuation), section 14.8.1, defines NPS with the exact promoter and detractor cut-offs inside the list of start-up valuation metrics. Expect a computation, and above all a cut-off question — the 9-or-10 and 6-or-lower boundaries are precisely the kind of detail an exam likes to move by one.

• Detractors are 6 or lower, not 5 or lower. Promoters are 9 or 10, not 8 and above.
• The 7s and 8s are excluded from both groups but stay in the denominator. They pull the score down by dilution.
• The result is a number, not a percentage, and it can be negative.
• A high NPS is not low churn. Customers can love a product and still stop needing it.
• NPS is non-financial. It says nothing about revenue, margin or valuation by itself — the workbook groups it with the customer retention metrics, not the financial ones.
• Do not confuse it with the viral coefficient, which measures referrals actually sent and converted rather than willingness to recommend.