Net Promoter Score (NPS) is a metric widely used to measure customer loyalty and satisfaction with a company, product, or service.
Developed by Fred Reichheld, Bain & Company and Satmetrix in 2003, the NPS has established itself as an essential tool for assessing the quality of customer experience and predicting business growth.
Operation of the NPS:
The NPS is based on one basic question, “On a scale of 0 to 10, how likely are you to recommend our product/service/company to a friend or colleague?”
Based on the responses, customers are classified into three categories:
- Promoters (score 9-10): Enthusiastic and loyal customers who are likely to continue to purchase and recommend the company to others.
- Passives (score 7-8): Satisfied but not enthusiastic customers, vulnerable to competitive offers.
- Detractors (score 0-6): Dissatisfied customers who could damage the brand through negative word of mouth.
NPS calculation:
Net Promoter Score is calculated by subtracting the percentage of detractors from the percentage of promoters:
NPS = % Promoters – % Detractors
The result is a number between -100 (all detractors) and +100 (all promoters).
Net Promoter Score: interpretation and benchmarking:
There is no universally “good” NPS score, as values vary significantly across sectors and markets. In general:
- A positive NPS (>0) is considered good
- An NPS above 50 is excellent
- An NPS greater than 70 is considered exceptional
However, it is more important to compare one’s NPS with direct competitors and monitor its performance over time.
Benefits of NPS:
- Simplicity: Easy to implement and understand for all levels of business.
- Comparability: Allows comparisons between different products, business units or competitors.
- Correlation with growth: Studies have shown a strong relationship between high NPS and revenue growth.
- Action orientation: Provides clear direction for targeted improvements.
- Customer focus: Puts the customer experience at the center of business strategy.
Net Promoter Score: limitations and considerations
Despite its popularity, the NPS has some limitations:
- Does not provide details of the reasons behind the scores
- Can be influenced by cultural factors in international contexts
- Does not capture all the nuances of the customer experience
For this reason, many companies supplement the NPS with qualitative insight questions and other customer experience metrics.
Effective implementation:
To maximize the value of NPS, companies should:
- Measure regularly and consistently
- Analyze trends over time
- Segment results by products, channels, or customer segments
- Act quickly on feedback received
- Communicate results and actions taken to the entire organization
In conclusion, Net Promoter Score is a powerful but not exhaustive tool for measuring and improving customer loyalty.
When used as part of a broader customer experience strategy, NPS can guide companies toward sustainable growth based on customer satisfaction and loyalty
