Net Promoter Score (NPS) is a metric to measure customer loyalty by determining how likely they are to recommend a product. Learn about calculating NPS and how it can be used to improve customer satisfaction.
Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction towards a brand or product. It was introduced by Fred Reichheld, a partner at Bain & Company, in 2003 and has since become a popular tool for businesses to gauge customer satisfaction.
NPS is calculated by asking customers a single question: "On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?" Based on their responses, customers are classified into three categories:
The NPS score is then calculated by subtracting the percentage of detractors from the percentage of promoters. The score can range from -100 (if all customers are detractors) to +100 (if all customers are promoters).
NPS is important because it provides businesses with a simple and effective way to measure customer satisfaction and loyalty. By tracking NPS over time, businesses can identify trends and make improvements to their products/services to increase customer satisfaction and loyalty.
Moreover, NPS is a leading indicator of business growth. Studies have shown that companies with high NPS scores tend to have higher revenue growth rates than those with low scores. This is because loyal customers are more likely to make repeat purchases and refer others to the brand.
NPS is a powerful tool for businesses to measure customer satisfaction and loyalty. By asking a simple question and calculating a single score, businesses can gain valuable insights into their customers' perceptions and make data-driven decisions to improve their products/services. Moreover, NPS is a leading indicator of business growth, making it a key metric for businesses to track and optimize.