Description: The Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction. It is based on a single question posed to customers: ‘How likely are you to recommend our company/product/service to a friend or colleague?’ Responses are classified on a scale from 0 to 10, where customers are divided into three categories: promoters (scores of 9 to 10), passives (scores of 7 to 8), and detractors (scores of 0 to 6). NPS is calculated by subtracting the percentage of detractors from the percentage of promoters, yielding a value that can range from -100 to +100. This metric is particularly valuable in various business environments, where continuous feedback and customer improvement are essential. NPS not only measures customer satisfaction but also provides a clear insight into customer loyalty, which can influence business strategy and decision-making. Its simplicity and effectiveness have made it a popular tool across various industries, allowing companies to identify areas for improvement and foster stronger relationships with their customers.
History: The Net Promoter Score was introduced by Fred Reichheld in 2003 in his book ‘The Ultimate Question’. Since then, it has evolved and been widely adopted across various industries as a key tool for measuring customer loyalty. Its popularity has grown due to its simplicity and ability to provide valuable insights into customer experience.
Uses: NPS is primarily used in customer satisfaction surveys, market analysis, and customer experience studies. Companies use it to assess customer loyalty, identify areas for improvement, and measure the impact of changes in products or services. It is also used to compare performance across different customer segments or competitors.
Examples: A practical example of NPS is when a company sends a survey to its customers after a major update, asking about their willingness to recommend the product or service. The results can help the company understand how the update has affected customer satisfaction and make adjustments if necessary.
