Net Promoter Score is a benchmark tool to measure customer loyalty. It's calculated based on customers' willingness to recommend a company's product or service.

Definition

Net Promoter Score (NPS) is a popular benchmarking tool that gauges the loyalty of a company's customer relationships. It was developed by Fred Reichheld, Bain & Company, and Satmetrix in 2003. The score is calculated based on responses to a single question: 'How likely are you to recommend our company/product/service to a friend or colleague?' The scoring for this answer is most often based on a 0 to 10 scale.

Usage and Context

In the context of business, NPS is used as a measure of customer loyalty and is highly correlated with revenue growth. NPS is not industry-specific and can be used by any business that interacts with customers or clients. The simplicity of the NPS metric allows businesses to easily understand and communicate their customer loyalty level.

FAQ

How is Net Promoter Score calculated?

The Net Promoter Score is calculated by subtracting the percentage of detractors (customers who gave a score of 6 or lower) from the percentage of promoters (customers who gave a score of 9 or 10). Customers who gave a score of 7 or 8 are considered passives and do not directly impact the NPS.

What is a good Net Promoter Score?

An NPS that is positive (i.e., higher than zero) is considered good because it means that you have more promoters than detractors. A score of +50 is generally considered excellent.

Related Software

There are several software tools available that can help businesses implement and manage their NPS, such as SurveyMonkey, Qualtrics, and Medallia.

Benefits

The main benefit of using NPS is its simplicity. It's easy to understand and communicate throughout an organization. It provides a clear measure of a company's performance through its customers' eyes. It also helps identify unsatisfied customers, enabling the company to address issues and improve.

Conclusion

In conclusion, Net Promoter Score is a valuable tool for measuring customer loyalty. It's simple, easy to understand, and can be used by any industry. By regularly tracking NPS, businesses can identify areas for improvement and work towards enhancing customer satisfaction.

Related Terms

CSAT (Customer Satisfaction)

CSAT (Customer Satisfaction) is a key performance indicator that measures the satisfaction level of customers with a company's products or services.

Customer Loyalty

Customer loyalty refers to the likelihood of repeat customers choosing a specific brand or company over its competitors. It is beneficial for business growth and profitability.

Customer Loyalty Analyst

A Customer Loyalty Analyst is a professional who interprets customer data to understand factors influencing loyalty, aiming to develop strategies that increase customer retention.

Customer Loyalty Consultant

A Customer Loyalty Consultant is a professional who helps businesses improve customer retention and satisfaction, ultimately increasing revenue.

Customer Loyalty Director

A Customer Loyalty Director is responsible for developing and implementing strategies to improve customer loyalty and retention.

Customer Loyalty Manager

A Customer Loyalty Manager is a professional who manages customer retention and loyalty strategies to ensure customer satisfaction and boost business profitability.

Customer Loyalty Specialist

A Customer Loyalty Specialist is a professional focused on maintaining and enhancing a company's relationship with its customers to increase customer satisfaction, retention, and loyalty.

Customer Loyalty Strategist

A Customer Loyalty Strategist is a professional who develops strategies to foster customer loyalty, leading to increased business profits and growth.

Customer Retention

Customer retention refers to strategies used by businesses to encourage repeat business and loyalty from their existing customer base.

Customer Retention Specialist

A Customer Retention Specialist is a professional responsible for managing customer relationships and ensuring customer loyalty and satisfaction.

Customer Satisfaction Analyst

A Customer Satisfaction Analyst is a professional responsible for analyzing customer feedback to improve satisfaction levels.

Customer Satisfaction Coordinator

A Customer Satisfaction Coordinator is a professional who ensures customer satisfaction with a company's products or services.

Customer Satisfaction Director

A Customer Satisfaction Director is a high-level executive who oversees customer service activities, develops customer service policies, and measures customer satisfaction.

Customer Satisfaction Executive

A Customer Satisfaction Executive is responsible for ensuring outstanding service and support to customers, aiming to increase customer satisfaction, loyalty, and retention.

Customer Satisfaction Manager

A Customer Satisfaction Manager is a critical role in businesses, responsible for improving customer service and satisfaction.

Customer Satisfaction Metrics

Customer Satisfaction Metrics are quantitative measures used to assess the level of customer satisfaction with a company's products or services.

Customer Satisfaction Research Director

A Customer Satisfaction Research Director oversees research activities aimed at understanding customer satisfaction levels, helping businesses improve their customer relationship strategies.

Customer Satisfaction Researcher

A Customer Satisfaction Researcher is a professional who conducts research to understand and improve a company's customer satisfaction.

Customer Satisfaction Specialist

A Customer Satisfaction Specialist is a professional who ensures customer needs are met, handles queries, and works towards improving customer satisfaction.

Customer Satisfaction Strategist

A Customer Satisfaction Strategist is a professional who develops strategies to improve customer satisfaction, enhance customer experience, and drive business growth.

Customer Satisfaction Survey Analyst

A Customer Satisfaction Survey Analyst designs and implements surveys to gauge customer satisfaction. They analyze results to help companies improve.
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