- Net Promoter Score (NPS)
- A customer loyalty metric that measures the likelihood customers will recommend a company, product, or service to others.
Net Promoter Score (NPS) is a customer loyalty metric that measures the likelihood customers will recommend a company, product, or service to others. NPS is calculated based on responses to a single question: "On a scale of 0-10, how likely are you to recommend [company/product/service] to a friend or colleague?"
How NPS Works
The Question: Customers rate their likelihood to recommend on a scale of 0-10: - 0-6: Detractors (unlikely to recommend, may even discourage others) - 7-8: Passives (satisfied but not enthusiastic, unlikely to actively promote) - 9-10: Promoters (highly likely to recommend, enthusiastic advocates)
The Calculation: NPS = % Promoters - % Detractors
The score ranges from -100 (all detractors) to +100 (all promoters). A positive score indicates more promoters than detractors.
Why NPS Matters
Predictive of Growth: NPS correlates strongly with business growth. Companies with higher NPS tend to grow faster than competitors.
Customer Loyalty Indicator: NPS measures customer loyalty and advocacy, which are key drivers of long-term success.
Simple and Actionable: The single-question format makes it easy to collect and act on, leading to higher response rates.
Industry Benchmarking: NPS enables comparison with industry standards and competitors.
Focus on Improvement: The follow-up question ("Why?") provides actionable insights for improvement.
Benefits of High NPS
Customer Acquisition: Promoters actively recommend your brand, driving organic customer acquisition.
Customer Retention: Promoters are more likely to remain customers and increase their spending.
Reduced Marketing Costs: Word-of-mouth recommendations reduce the need for paid marketing.
Competitive Advantage: Higher NPS indicates superior customer experience compared to competitors.
Employee Satisfaction: High NPS often correlates with employee satisfaction and pride in the company.
Improving NPS
Focus on Detractors: Address issues that create detractors to convert them to passives or promoters.
Delight Promoters: Provide exceptional experiences that turn satisfied customers into enthusiastic promoters.
Reduce Friction: Eliminate pain points and make it easy for customers to achieve their goals.
Personalize Experiences: Tailor interactions based on customer preferences and history.
Act on Feedback: Use NPS feedback to make concrete improvements and show customers their input matters.
Best Practices
Ask Regularly: Collect NPS consistently to track trends and changes over time.
Follow Up: Always ask "Why?" to understand the reasoning behind scores.
Act Quickly: Respond to detractors promptly to address their concerns and potentially convert them.
Share Results: Communicate NPS results and improvements across the organization to maintain focus.
Segment Analysis: Analyze NPS by customer segment, product, or touchpoint to identify specific improvement opportunities.
Benchmark: Compare your NPS to industry standards and competitors to understand your relative position.
By focusing on Net Promoter Score, organizations can measure customer loyalty, identify improvement opportunities, and drive growth through exceptional customer experiences.