What is Net Promoter Score?
Net Promoter Score (NPS) is a key metric used to measure customer loyalty and satisfaction based on their likelihood to recommend a product or service.
Explanation
NPS is determined by asking customers a single question: "How likely are you to recommend our product/service to a friend or colleague?" Responses are rated on a scale of 0 (not likely) to 10 (extremely likely). Customers are categorized into:
Importance
- Measures Customer Loyalty: NPS provides direct insights into customer satisfaction and advocacy.
- Predicts Growth: High NPS scores often correlate with increased customer retention and referrals.
- Identifies Improvement Areas: Feedback from detractors highlights areas needing attention.
- Simplifies Tracking Over Time: NPS offers a consistent benchmark for assessing customer sentiment.
How It Works
- Survey Customers: Use the NPS question in email surveys, on-site prompts, or feedback forms.
- Categorize Responses: Segment respondents into promoters, passives, and detractors based on their scores.
- Calculate the Score: Subtract the percentage of detractors from the percentage of promoters.
- Analyze Feedback: Collect qualitative responses to understand reasons behind the scores.
- Implement Changes: Use insights to enhance customer experiences and address concerns.
Benefits
- Boosts Customer Retention: Addressing detractor feedback helps improve loyalty.
- Drives Referrals: A high NPS means more organic growth through word-of-mouth marketing.
- Encourages Continuous Improvement: Regular NPS surveys create a feedback loop for refinement.
- Monitors Brand Health: A single metric provides a quick snapshot of customer sentiment.
- Aligns Team Goals: NPS results can drive company-wide efforts to enhance customer satisfaction.