Often represented on a numeric scale, net promoter score (NPS) measures customer satisfaction and loyalty.
Detailed Explanation
Bain and Company’s partner Fred Reichheld developed NPS in 2003, and millions of companies use it to measure how customers perceive them.
You may have contributed to a brand’s NPS without realizing it. If you’ve ever bought a product, service, or experience, the company presumably asked you, “On a scale of 1–10, how likely are you to recommend this product to a friend?” And you typically answer above from 0 (extremely unlikely) to 10 (extremely likely). These scores fall into three categories:
– Promoters (score 9 or 10): Loyal and highly satisfied customers who recommend the brand to friends and family.
– Passives (score 7 or 8): Content but not overly satisfied customers. They may recommend the brand to friends and family.
– Detractors (score 0 to 6): Dissatisfied customers who are unlikely to repurchase. They may also dissuade others from doing so.
To calculate NPS, subtract the percentage of detractors from the percentage of promoters. For example, if 60% are promoters, 30% are passives and 10% are detractors, the NPS would be:
60% – 10% = 50
An NPS score above 20 is “favorable.” Scores above 50 are “excellent,” while anything above 80 is the top percentile.