What Is Net Promoter Score (NPS)?
The Net Promoter Score (NPS) is a widely recognized management tool businesses use to gauge customer loyalty and overall satisfaction with their products or services.
NPS was introduced by Fred Reichheld of Bain & Company in 2003 and provides a straightforward way to measure customer sentiment and serves as a predictor of business growth.
The NPS is derived from a single question: "On a scale of 0 to 10, how likely are you to recommend our company/product/service to a friend or colleague?" The responses to this question are then used to classify customers into three categories:
- Promoters (score 9-10). These loyal customers are most likely to recommend your product or service. They are enthusiastic and satisfied customers who contribute to the growth of your business.
- Passives (score 7-8). These customers are satisfied but not enthusiastic. They may be swayed by competitive offerings and are less likely to promote your business.
- Detractors (score 0-6). These are unhappy customers who can potentially harm your brand through negative word-of-mouth.
The NPS measures the overall sentiment towards your company, product, or service and can be a powerful indicator of customer relationships. The NPS is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. The score can range from -100 (if every customer is a Detractor) to +100 (if every customer is a Promoter).
Remember that while NPS provides valuable insights into customer loyalty, it doesn't reveal the underlying reasons behind the score or specific areas for improvement. Therefore, it's often beneficial to follow up the NPS question with an open-ended question such as "What is the primary reason for your score?" This approach can provide more detailed feedback and actionable insights.