Net Promoter Score (NPS) is a well-known metric in SaaS and eCommerce but is also used by many companies across all industries.
NPS measures customer loyalty and provides you with feedback about how well your products or services are received. This metric tells you how likely it is your customers will recommend your product or service to their friends and family.
Crucially, NPS plays a significant role in determining a company’s future growth, especially in industries where there is a lot of competition. When customers have real choice, a company’s promoters are the deciding factor in whether more decide to buy from you.
Your NPS can also indicate how likely your existing customers are to buy from you again.
You measure your NPS by sending your customers a short survey. In this survey, you ask your customers how likely they are to recommend your company on a scale of 1-10.
Depending on their score, your customer will either be a Detractor, Neutral or a Promoter. Your aim is to have as many customers as possible to score as Promoters to gain a high NPS.
Scores of 0-6 are DETRACTORS
Scores of 7-8 are NEUTRAL
Scores of 9-10 are PROMOTERS
Get an idea of your industry’s NPS average to help you figure out where you are on the spectrum. You might think you have a low score, but are actually performing very well for your industry.
Dividing the percentage of your customers who are Promoters by the percentage who are Detractors gives you your overall NPS score. It will be between -100 and 100.
While NPS is often considered The Ultimate Question when measuring the importance of customer loyalty, it can be a somewhat misleading metric. Why? Because NPS only measures the customer’s intent to recommend the company. It doesn’t measure action. The customer might be disloyal for other reasons in the future – perhaps they are extremely price sensitive or they have a bad service experience. Just because a customer signals they might recommend a company, doesn’t
mean they will follow through.
However, NPS is still very useful for looking at overall loyalty trends in the user base, and for uncovering Promoters that might be helpful in the future. NPS could be considered a “leading indicator” of loyalty.
(NPS) is a powerful measure of how customers feel about your business. The metric is based on one simple question: How likely are you to recommend our business to a friend or colleague? The answer is given on a scale from 0-10, and responses are then sorted into Promoters (those who respond with a 9 or 10), Passives (7 or 8), and Detractors (6 or below).
Your NPS score is an excellent measure of customer loyalty, and customer loyalty is an excellent measure of your profitability and growth potential. In fact, some research has found that companies with industry-leading NPS scores outgrow their competitors by more than double.
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