In marketing, the NPS-score is a common term. But what exactly is the Net Promoter Score (NPS)?
The Net Promoter Score (NPS)shows the extent to which your customers are willing to recommend your organization. Or, to put it differently, it shows how loyal your customers are. The Net Promoter Score (NPS) measures the intention which customers have to recommend you and relates this to revenue growth. The Net Promoter Score has been developed in 2003 by management consultant Fred Reichheld at Bain & Company in collaboration with Satmetrix. Their aim was to come up with a clear and simple customer loyalty score which can be compared over different time slots and / or between various sectors.
Research method NPS
During the survey, respondents are asked: “To what extent would you recommend the company, brand or product X to friends, family or colleagues?” Respondents answer on the basis of an 11-point scale, ranging from 0 (highly unlikely) to 10 (highly likely). On the basis of the score which is given the respondent is:
a ‘promoter’ – 9 or 10 points
a ‘passive’ – 7 or 8 points or
a ‘detractor’ – 0 to 6 points.
Now you know what the NPS is. However, it is just a method until you discover the ways in which you can use it on a daily basis.
The NPS score lies between -100 and +100 and is calculated by deducting the percentage of Detractors from the percentage of Promoters. If your company scores an NPS of 20 or higher, then your customers are reasonably loyal. If your NPS is below 0 (e.g.-10), then customer loyalty is not high enough. Of course, it is the best if each respondent would be a promoter. In that case your score would be +100. So the NPS is a very important indicator for customer loyalty in relation to your company.
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