StartArticlesWhat is NPS - Net Promoter Score?

What is NPS – Net Promoter Score?

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, the NPS has become one of the most popular tools for assessing 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, enthusiastic customers who are likely to continue purchasing and recommending to others.

2. Passives (score 7-8): Satisfied but not enthusiastic customers, vulnerable to competitive offers.

3. Detractors (score 0-6): Unhappy customers who can 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.

NPS Interpretation:

– NPS > 0: Generally considered good

– NPS > 50: Considered excellent

– NPS > 70: Considered world-class

Benefits of NPS:

1. Simplicity: Easy to implement and understand.

2. Benchmarking: Allows comparisons between companies and sectors.

3. Predictability: Correlated with business growth.

4. Actionability: Identifies areas for improvement and dissatisfied customers.

Limitations of NPS:

1. Oversimplification: May not capture nuances of the customer experience.

2. Lack of context: Does not provide reasons for the scores given.

3. Cultural variations: Interpretations of the scale may vary between cultures.

Best practices:

1. Follow-up: Ask the reason for the score to gain qualitative insights.

2. Frequency: Measure regularly to monitor trends.

3. Segmentation: Analyze NPS by customer or product segments.

4. Action: Use insights to improve products, services and experiences.

Implementation:

NPS can be implemented through email surveys, SMS, website, or integrated into apps and digital products.

Importance for business:

NPS has become a key metric for many companies, often used as a KPI (Key Performance Indicator) to assess customer satisfaction and overall business performance.

NPS Evolution:

Since its introduction, the concept of NPS has evolved to include practices such as “Closed Loop Feedback,” where companies actively follow up with respondents to resolve issues and improve the experience.

Conclusion:

The Net Promoter Score is a valuable tool for measuring and improving customer loyalty. Although it has its limitations, its simplicity and correlation with business growth have made it a widely adopted metric. When used in conjunction with other metrics and customer experience practices, NPS can provide valuable insights to drive customer satisfaction and business growth.

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