Net Promoter Score® is the measure of how likely your customers are to recommend your business to others.
What is Net Promoter Score® (“NPS”)?
Net Promoter Score® is a measure of the likelihood of your customers to recommend your brand, product or service to friends and colleagues and to evaluate their loyalty. The importance of measuring your customer loyalty lays in the fact that satisfied customers buy again, recommend your service to others and are less likely to defect to a competitor.
A solid NPS® Tool, is one who can “close the loop”. Closing the loop is a process by which you are able to learn more about your customers who have provided NPS® feedback, and potentially change a negative perception, often converting a Detractor into a Promoter, by using some relevant follow up questions using a website survey tool.
nps® is widely used as part of a bigger Voice Of Customer program in organizations, and is a key component is understanding your customer satisfaction and growing your business.
What Is The Net Promoter Score® Calculation?
The entire NPS calculation is based on the answers of this single question with a scale of 1-10: How likely is it that you would recommend [brand] to a friend or colleague? This question is referred to as the Net Promoter Score Question.
The NPS® calculation is consisted of:
- Promoters (score 9-10) are your loyal customers & brand ambassadors who will keep buying and refer others, fueling business growth.
- Passives (score 7-8) are satisfied customers but unenthusiastic who are very likely to respond to competitive offerings.
- Detractors (score 0-6) are your unhappy customers who can damage your brand reputation and harm your business growth.
The result of the NPS® calculation can vary from as low as -100 (where every customer is a Detractor) to as high as 100 (where every customer is a Promoter).
How to read a Net Promoter Score®?
The basic concept and calculation of Net Promoter Score is easy to understand, and that’s one of the reasons for it’s popularity among businesses. If a company has more detractors than promoters, it’s NPS score will be negative, while if it has more promoters than detractors, the score will be positive.
This simple score provide companies with a unified and straightforward way to measure the health of the business as the NPS score usually reflects it’s customer satisfaction and experience from products or services delivered by the company or it’s employees.
An NPS score can also be a driver for employees to improve the level of service they give to customers, as part of the transparency this score creates throughout the organizations.
In a nutshell, a higher NPS score indicates a healthier business, while lower NPS score can indicate a problem with customer loyalty and satisfaction companies should look into.