What is Net Promoter Score (NPS)?

Net Promoter Score (NPS) is a metric used to measure customer loyalty based on the likelihood of customers to recommend a company's products or services to others. It is a common tool used by businesses to understand customer satisfaction and gauge their loyalty.

How is NPS calculated?

Customers are usually asked a single question: “On a scale of 0-10, how likely are you to recommend our company/product/service to a friend or colleague?” Based on their responses, customers are categorized into three groups:

• Promoters (score 9-10): Highly satisfied customers who are likely to recommend the company.
• Passives (score 7-8): Satisfied but unenthusiastic customers who may be easily swayed by competitors.
• Detractors (score 0-6): Unhappy customers who are unlikely to recommend the company and may harm the company's reputation through negative word-of-mouth.

The NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters.

Why is NPS important?

NPS provides a simple and effective way for companies to track customer loyalty over time and compare their performance with industry benchmarks. It also helps companies identify areas for improvement and focus on strategies to turn Detractors into Promoters, ultimately driving business growth and profitability.