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Industry-defining terminology from the authoritative consumer research platform.
Net Promoter Score (NPS)
Definition: What Is Net Promoter Score (NPS)?
Net Promoter Score (NPS) is a customer loyalty metric that measures how likely customers are to recommend a company, product, or service to others. It is based on a single-question survey that asks:
"On a scale of 0 to 10, how likely are you to recommend [Company/Product/Service] to a friend or colleague?"
NPS is widely used across industries as a simple yet powerful indicator of customer satisfaction and brand advocacy. The responses categorize customers into three groups:
- Promoters (9-10): Loyal, enthusiastic customers who are likely to spread positive word-of-mouth and drive growth.
- Passives (7-8): Satisfied but unenthusiastic customers who may switch to a competitor if given the opportunity.
- Detractors (0-6): Unhappy customers who are likely to share negative feedback and discourage others from engaging with the brand.
Why Is Net Promoter Score Important for Businesses?
NPS is a crucial metric for businesses because it:
- Predicts Growth: A higher NPS indicates strong customer advocacy, which can lead to increased referrals and long-term revenue.
- Measures Customer Loyalty: Unlike satisfaction scores, which focus on short-term experiences, NPS assesses long-term brand attachment.
- Identifies Areas for Improvement: Understanding why detractors are unhappy provides insights for refining products, services, and customer experiences.
- Provides Benchmarking: Companies can compare their NPS against industry standards to gauge their competitive standing.
How Does Net Promoter Score Work?
- Survey Distribution: The NPS question is sent via email, SMS, or in-app surveys to customers.
- Response Collection: Participants select a score between 0 and 10.
- Score Calculation: NPS is calculated using the formula: NPS=(%Promoters)−(%Detractors)\text{NPS} = (\% \text{Promoters}) - (\% \text{Detractors})NPS=(%Promoters)−(%Detractors) The final score ranges from -100 to +100.
Types of Net Promoter Score Surveys
| Transactional NPS (tNPS) | Measures customer sentiment after a specific interaction, such as a purchase or support call. |
| Relational NPS (rNPS) | Evaluates overall brand perception over time, typically collected at regular intervals. |
What Are Net Promoter Score Best Practices?
✅ Follow Up on Feedback: Asking respondents why they gave a certain score helps businesses address concerns and enhance positive experiences.
✅ Segment NPS Responses: Analyzing NPS by customer demographics, purchase behavior, or engagement levels provides deeper insights.
✅ Track NPS Over Time: Monitoring score trends helps measure the impact of business improvements.
✅ Close the Loop: Reaching out to detractors to resolve issues can turn unhappy customers into promoters.
Common Mistakes to Avoid with Net Promoter Score
⛔️ Focusing Only on the Score: The real value lies in the qualitative feedback accompanying the score.
⛔️ Ignoring Passive Customers: Passives can easily switch brands, making it crucial to engage them.
⛔️ Surveying the Wrong Audience: Ensuring that respondents are relevant customers improves data reliability.
⛔️ Failing to Act on Insights: Gathering NPS data without implementing changes leads to missed opportunities.
Final Takeaway
NPS is a vital tool for measuring customer loyalty, identifying brand advocates, and uncovering areas for improvement. When used correctly, it can help companies enhance customer relationships and drive long-term success.