Net Promoter Score (NPS)

Definition

Net Promoter Score (NPS) is a customer loyalty metric developed by Fred Reichheld, Bain & Company, and Satmetrix. It measures the willingness of customers to recommend a company’s products or services to others. NPS is calculated based on responses to a single question: How likely is it that you would recommend our company/product/service to a friend or colleague? The scoring for this answer is most often based on a 0 to 10 scale.

Importance

NPS is a key performance indicator in customer success and support. It helps businesses understand their customer satisfaction and loyalty levels, which are crucial for customer retention and business growth. A high NPS indicates that customers are happy with your product/service and are likely to recommend it, leading to new customer acquisition.

Calculation

NPS is calculated by subtracting the percentage of detractors (customers who score 0-6) from the percentage of promoters (customers who score 9-10). The score can range from -100 (all detractors) to +100 (all promoters).

Example

For instance, if you surveyed 100 customers and 70 rated you as a 9 or 10 (promoters), 10 rated you as 7 or 8 (passives), and 20 rated you as 0-6 (detractors), your NPS would be 50 (70% promoters - 20% detractors).

Best Practices

1. Regularly survey your customers to keep track of your NPS. 2. Follow up with detractors to understand their concerns and improve their experience. 3. Recognize and reward promoters to encourage continued loyalty. 4. Use feedback from the NPS survey to make improvements to your product/service.