Net Promoter Score (NPS)

What is Net Promoter Score (NPS)?

Net Promoter Score (NPS) is a customer loyalty metric used to measure customer satisfaction and loyalty. It is calculated by asking customers to rate their likelihood of recommending a company's product or service on a scale of 0 to 10. The score is then calculated by subtracting the percentage of customers who rate the company 0-6 (detractors) from the percentage of customers who rate the company 9-10 (promoters).

Why is Net Promoter Score (NPS) important?

Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction. It is important because it provides a simple, yet powerful measure of customer loyalty and satisfaction that can be used to track customer sentiment over time. NPS can be used to identify areas of improvement, measure customer loyalty, and track customer satisfaction. It can also be used to compare customer loyalty and satisfaction across different products, services, and customer segments.

How can I use Net Promoter Score (NPS)?

Net Promoter Score (NPS) is a widely used customer satisfaction metric that helps businesses measure customer loyalty and advocacy. Here are some of the key ways to use NPS:

1. Measuring customer satisfaction: NPS is based on a simple question: "On a scale of 0 to 10, how likely are you to recommend our company to a friend or colleague?" The response to this question provides a single score that can be used to measure overall customer satisfaction.
2. Benchmarking performance: NPS scores can be used to benchmark a company's performance against industry standards or against competitors. This provides valuable insights into how a company is performing relative to others in its industry.
3. Identifying areas for improvement: NPS scores can help a company identify areas where it needs to improve, such as in customer service, product quality, or marketing. By understanding what drives customer satisfaction, a company can make targeted improvements that can help boost its NPS score.
4. Tracking progress over time: By regularly measuring NPS, a company can track its progress over time and see how its customer satisfaction is changing. This helps to ensure that a company is continuously improving and that its customers are happy with its products and services.
5. Driving customer loyalty: NPS scores can also be used to identify and reward loyal customers, which can help to increase customer retention and drive business growth.

Overall, NPS is a valuable tool for businesses looking to understand and improve customer satisfaction. By regularly measuring NPS and taking action to improve scores, a company can build stronger relationships with its customers and drive long-term success.

Brief history of Net Promoter Score (NPS)

Net Promoter Score (NPS) was first introduced by Fred Reichheld in 2003 as a way to measure customer loyalty and advocacy. NPS is based on the idea that a company's customers can be divided into three categories: Promoters, Passives, and Detractors.

Promoters are customers who are highly satisfied with a company and are likely to recommend it to others. Passives are customers who are satisfied, but not necessarily enthusiastic about a company. Detractors are customers who are dissatisfied with a company and may actively discourage others from using it.

To calculate NPS, a company asks its customers the simple question: "On a scale of 0 to 10, how likely are you to recommend our company to a friend or colleague?" Based on the responses, customers are classified as Promoters (9-10), Passives (7-8), or Detractors (0-6). NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters.

Since its introduction, NPS has become a widely used customer satisfaction metric, adopted by companies in a variety of industries around the world. NPS is seen as a simple, yet effective, way to measure customer loyalty and advocacy, and has become a key part of many companies' customer relationship management (CRM) strategies.

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Related Terms

Voice of the customer (VOC)

Customer Testimonial

Customer Satisfaction Score (CSAT)

Customer Advocacy