NPS, or Net Promoter Score, is a metric used to measure customer satisfaction and loyalty towards a company, product or service. Developed by Fred Reichheld, Bain & Company and Satmetrix in 2003, NPS has become one of the most popular tools for evaluating customer experience and predicting business growth.
Operation:
NPS is based on a single fundamental question: “On a scale of 0 to 10, how likely are you to recommend our company/product/service to a friend or colleague?”
Categorization of respondents:
Based on the responses, customers are classified into three groups:
1. Promoters (score 9-10): Loyal and enthusiastic customers who are likely to continue buying and recommending to others.
2. Liabilities (score 7-8): Satisfied but not enthusiastic customers, vulnerable to competitive offers.
3. Detractors (score 0-6): Dissatisfied customers who may harm the brand through negative feedback.
NPS calculation:
NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters:
NPS = % Promoters % Detractors
The result is a number between -100 and 100.
Interpretation of NPS:
> 0 NPS: Generally considered good
> 50 NPS: Considered excellent
> 70 NPS: Considered world-class
Benefits of NPS:
1. Simplicity: Easy to implement and understand.
2. Benchmarking: Allows comparisons between companies and sectors.
3. Predictability: Correlated to business growth.
4. Actionability: Identifies areas of improvement and dissatisfied customers.
NPS limitations:
1. Over-simplification: It may not capture nuances of customer experience.
2. Lack of context: Does not provide reasons for assigned scores.
3. Cultural variations: Interpretations of the scale may vary across cultures.
Best practices:
1. Follow-up: Ask the reason for the score to get qualitative insights.
2. Frequency: Measure regularly to keep up with trends.
3. Segmentation: Analyze NPS by customer segments or products.
4. Action: Using insights to improve products, services and experiences.
Implementation:
NPS can be implemented through surveys via email, SMS, website, or integrated into digital applications and products.
Importance for business:
NPS has become a key metric for many companies, often being used as a KPI (Key Performance Indicator) to assess customer satisfaction and overall business performance.
Evolution of NPS:
Since its introduction, the concept of NPS has evolved to include practices such as the“Closed Loop Feedback”, where companies actively follow up with respondents to solve problems and improve the experience.
Conclusion:
The Net Promoter Score is a valuable tool for measuring and improving customer loyalty. While it has its limitations, its simplicity and correlation with business growth have made it a widely adopted metric.When used in conjunction with other customer experience metrics and practices, NPS can provide valuable insights to drive customer satisfaction and business growth.
