Net Promoter Score

By July 14, 2020 No Comments

Glossary

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Net Promoter Score

Net promoter score is a simplified index that is used as a proxy for understanding customer experience, satisfaction, and loyalty. It’s usually a range from 0-10 and customers are asked to share their feedback by giving appropriate scores. Based on the scores, the customers are grouped in the following

  • Promoters (9-10): 

Loyal customers who can buy more and refer to other customers. Efforts should try to retain them and to make them buy more. 

  • Passive (7-8): 

Satisfied customers who are unenthusiastic and vulnerable to competition. Due care should be taken to convert them to promoters, otherwise, they are prone to churn. 

  • Detractors (0-6): 

Unhappy customers can impede your brand’s growth and can result in negative word-of-mouth. Proper root-cause analysis should be carried out for this segment to understand the problem areas and rectify them accordingly.  

Why NPS is Important:

NPS is easy to calculate and compare, and it acts as a measure for brand performance rather than as feedback for an individual customer transaction.

NPS helps you in finding your most loyal customers and use them as an audience segment of who to build your product for. NPS should be calculated regularly while most companies track on a monthly basis.

Benefits of Calculating NPS:

  1. It measures the likelihood of repeat customers
  2. It proactively reduces customer churn
  3. It indicated the health of your brand as a whole
  4. It helps in product development
  5. It scopes and gives the direction for change and improvement
  6. An easy metric to benchmark against your competitors
  7. Strengthens customer relationship

If used well, NPS can accurately measure customer experiences and can be used as the core metric to predict business growth.