Understanding the Net Promoter Score
The Net Promoter Score is a business tool used to measure customer loyalty and satisfaction. First introduced by Fred Reichheld in 2003, NPS has become a cornerstone in customer experience metrics. Its importance lies in predicting customer behavior and business growth. How NPS is Calculated The calculation of NPS is straightforward but highly effective in categorizing customer sentiment. Here are the key components involved: Promoters: These loyal enthusiasts will continue buying from you and referring others, fueling your growth. Promoters are typically those who score 9 or 10 on the NPS survey. Passives: These customers are satisfied but unenthusiastic and vulnerable to competitive offerings. Passives have a score of 7 or 8, as they don’t actively promote your brand but aren’t detractors, either. Detractors: These unhappy customers can damage your brand and impede growth through negative word-of-mouth. Detractors score between 0 and 6, indicating dissatisfaction. NPS Formula: You can calculate the Net Promoter Score by subtracting the Detractors from the Promoters: • NPS = %Promoters – %Detractors • Percentage of Promoters = (Number of Promoters / Total Responses) × 100 • Percentage of Detractors = (Number of Detractors / Total Responses) × 100 NPS Score Range: NPS scores range from -100 to +100. A higher score indicates customer loyalty, while a lower score highlights improvement areas. Types of NPS Surveys NPS surveys come in two main types, each providing different insights. These types are: Transactional NPS surveys are sent after a transaction. These surveys help gauge immediate customer satisfaction following
