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The Net Promoter Score (NPS) is a crucial business metric that gauges customer loyalty and satisfaction. It’s a simple yet powerful tool that asks customers one question: “On a scale of 0-10, how likely are you to recommend our company to others?” The responses are then used to classify customers into Promoters (9-10), Passives (7-8), and Detractors (0-6).
By subtracting the percentage of Detractors from the percentage of Promoters, we calculate the NPS. This score can range from -100 (all Detractors) to +100 (all Promoters). A positive NPS is generally perceived as good, and a score above 50 is considered excellent. It’s a straightforward way for businesses to track customer sentiment and strive for continuous improvement.
Net Promoter Score, or NPS, is a metric used by businesses to measure customer satisfaction and loyalty. It provides valuable insights into how likely customers are to recommend a company’s products or services to others.
The NPS is calculated based on responses to a simple question: “On a scale of 0-10, how likely are you to recommend our company to a friend or colleague?” Customers are then categorized into three groups: Promoters (score 9-10), Passives (score 7-8), and Detractors (score 0-6).
Benefits of using NPS:
Calculating NPS involves a simple mathematical formula:
NPS = % Promoters – % Detractors
The percentage of Promoters is determined by the number of respondents who gave a score of 9 or 10, while the percentage of Detractors represents those who scored 0 to 6. Passives, who scored 7 or 8, are not included in the NPS calculation.
Interpreting NPS results helps businesses gauge customer loyalty and identify areas for improvement:
NPS plays a significant role in shaping business strategy:
Net Promoter Score is an indicator of customer loyalty. A higher NPS suggests stronger loyalty, while a lower NPS may indicate areas for improvement to enhance customer satisfaction and nurture long-term loyalty.
A good Net Promoter Score varies across industries, but generally, a positive NPS above 50 is considered excellent. However, it is essential to benchmark against competitors and strive for continuous improvement.
The frequency of measuring NPS depends on several factors, including the company’s size, budget, and customer feedback cycle. It is recommended to measure NPS regularly, such as quarterly or annually, to track trends and identify areas for improvement.
While Net Promoter Score alone cannot predict business growth, it provides valuable insights into customer loyalty and satisfaction. By consistently monitoring NPS trends and taking appropriate actions, businesses can increase customer retention, drive referrals, and ultimately foster business growth.
To improve Net Promoter Score, companies can focus on enhancing customer experiences, addressing pain points, and incorporating feedback into their products and services. Building strong customer relationships, providing exceptional customer service, and actively resolving customer issues can contribute to raising NPS over time.