Net Promoter Score (NPS)
Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction. It is based on a single survey question:
"On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?"
How NPS Is Calculated
-
Respondents are categorized into three groups:
-
Promoters (9-10): Loyal customers who are likely to recommend the company.
- Passives (7-8): Satisfied but not enthusiastic customers who may switch to competitors.
- Detractors (0-6): Unhappy customers who may discourage others from using the company’s product/service.
Formula:
\[
\text{NPS} = \% \text{Promoters} - \% \text{Detractors}
\]
The score ranges from -100 to +100. A higher NPS indicates stronger customer loyalty.
Why NPS Matters
- Helps businesses track customer satisfaction over time.
- Identifies areas for improvement based on feedback.
- Strongly correlates with customer retention and growth.