NPS (Net Promoter Score) is a standardized measurement system that is used to measure customer loyalty and customer satisfaction. NPS can be measured by asking customers:
How likely are you to recommend us to your friends and colleagues?
NPS helps organizations to predict the company's business growth, especially when NPS score is compared to NPS industry benchmark and to competitors' NPS scores within the same industry. NPS describes the company history but also the current customer experience in the company. The NPS score is useful when estimating wider trends in customer loyalty and the customers' willingness to recommend.
In NPS tool, there is typically used a scale 0-10 wherein the customers who answer 0 are not likely to recommend and the customers who answer 10 are highly likely to recommend.
So the responses can be divided:
- 9-10 are promoters (not likely to recommend),
- 7-8 are passives (or neutral), and
- 0-6 are detractors (highly likely to recommend).
How NPS is calculated?
The percentage of customers who are highly likely to recommend you (promoters), subtract those who are disinclined, indifferent, or only somewhat likely to give you good word of mouth (detractors).
% Promoters – % Detractors = NPS.
But what is a good NPS then?
NPS score can vary between -100 to 100. NPS score between
0-50 is good,
50-70 is excellent, and
70-100 is world class.
More information about NPS you can find in our blog here.