What is Net Promoter Score ®?
Net Promoter Score ® (NPS) is a customer loyalty metric by Fred Reichheld from Bain & Company. It indicates the likelihood that a customer will recommend your business to a friend or a colleague.
How to Calculate Net Promoter Score ®?
NPS = (PROMOTERS – DETRACTORS) / RESPONDENTS
NPS is based on a single question: “How likely is it that you would recommend us to a friend or colleague?” The customer then rates their answer on a scale of 0-10. There are three categories of users, based on scores.
- Promoters (9-10)
- Passives (7-8)
- Detractors (0-6)
Hint: pay less per customer
Promoters are likely going to promote your business and passives are looking for something better. Detractors, on the other hand, are likely to disparage you.
What are the limitations of Net Promoter Score ®?
- NPS doesn’t tell you why customers promote you or not
- People lie in surveys.