NPS is a customer loyalty metric developed by (and a trademark of) Fred Reichheld, Bain & Company, and Satmetrix. It’s determined based on responses to a single question: How likely is it that you would 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.
It’s that pesky question you often see on websites, emails and even on your last flight’s boarding pass. It’s not just there to annoy you, well maybe a little, but it’s mostly there to gauge the customer’s overall satisfaction with a company’s product or service and the customer’s loyalty to the brand.
To calculate NPS, respondents are grouped into three categories:
- Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
- Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
- Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
The Net Promoter Score is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. It’s that simple, yet powerful.
The higher the NPS score, the more likely it is that your customer felt good about your service and will recommend it to others. The opposite is true if the score is low.