NPS stands for Net Promoter Score. It is a metric used to measure customer loyalty and satisfaction with a business. The NPS is calculated based on responses to a single question:
“On a scale of 0 to 10, how likely are you to recommend this company to a friend or colleague?”
How It Works:
- Scores: Respondents are categorized into three groups based on their answers:
- Promoters (9–10): Loyal enthusiasts likely to recommend your business.
- Passives (7–8): Satisfied but not actively enthusiastic customers.
- Detractors (0–6): Unhappy customers who may discourage others from using your service.
- Calculation:
- Subtract the percentage of Detractors from the percentage of Promoters to get your NPS score.
- NPS can range from -100 to +100.
Why It Matters: NPS helps businesses:
- Gauge overall customer sentiment.
- Identify areas for improvement in products, services, or support.
- Strategize on how to enhance customer loyalty and reduce churn.
It’s a simple yet powerful tool to understand customer perceptions and drive improvements.