Definition of Net Promoter Score (NPS)
A metric that measures customer loyalty and satisfaction by asking customers how likely they are to recommend a company or product to others.
Explanation of Net Promoter Score (NPS)
Net Promoter Score (NPS) is a customer satisfaction metric that measures the likelihood of customers recommending a company’s products or services to others. NPS is calculated based on responses to a single question: “On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?” Respondents are categorized into three groups: Promoters (score 9-10), Passives (score 7-8), and Detractors (score 0-6). The NPS is then calculated by subtracting the percentage of Detractors from the percentage of Promoters, resulting in a score between -100 and +100. A higher NPS indicates higher customer satisfaction and loyalty. Businesses use NPS to gauge customer sentiment, identify areas for improvement, and track changes in customer satisfaction over time. By understanding the factors that drive customer loyalty and addressing any issues, businesses can enhance their products, services, and customer experience. NPS is a valuable tool for measuring customer advocacy and predicting business growth.