Net Promoter Score (NPS)
Net Promoter Score (NPS) is a customer loyalty metric that is often used to measure how happy and loyal customers are. It is based on a simple question: “How likely are you to tell a friend or coworker about our product or service?” Customers rate how likely they are to buy something on a scale from 0 to 10, where 0 means “not at all likely” and 10 means “extremely likely.”
Based on their answers, customers are then put into three groups:
Promoters (score of 9 or 10): These customers are devoted fans who will keep buying and tell others about the company, which helps it grow and make money.
Passives (scores of 7 or 8): These customers are happy, but not overly excited about your business. They may be open to what your competitors have to offer.
Detractors (scores from 0 to 6): These customers are unhappy and can hurt the company’s reputation by saying bad things about it.
The Net Promoter Score is found by taking the percentage of people who don’t like something and taking it away from the percentage of people who like it. Scores can go from -100 (if all customers are detractors) to +100 (if all customers are promoters) (if all customers are promoters). A score of 0 means that there are the same number of people who like and dislike the idea.
Businesses often use NPS to find out how happy and loyal their customers are and where they can improve. It is also used to compare how well a company is doing with its competitors and to keep track of how customer satisfaction changes over time. NPS is a simple, easy-to-understand metric that can tell you a lot about how customers feel and what they do.
Usage
It is used in stakeholder (customer) management