What is Net Promoter Score (NPS)?
ELI5 — The Simple Version
Think of a time when you visited a new ice cream shop. After tasting the ice cream, someone asks if you'd tell your friends to try it. You think about the flavors, the service, and the shop's vibe before answering. In business, this is similar to the Net Promoter Score (NPS). Companies ask customers how likely they are to recommend their product or service, just like the ice cream shop asking if you'd tell your friends. They use a simple survey with a scale from 0 to 10. If you give a 9 or 10, you're a 'Promoter', like someone who loved the ice cream and can't wait to tell everyone. A 7 or 8 makes you 'Passive', meaning you thought it was okay but not worth shouting about. A score from 0 to 6 means you're a 'Detractor', someone who didn't enjoy it and wouldn't recommend it. This score helps businesses learn what customers think and how they can improve. A high NPS means people are likely to spread good reviews, helping the business grow, just like your favorite ice cream shop becoming the talk of the town!
Technical Deep Dive
Definition
Net Promoter Score (NPS) is a customer loyalty metric that quantifies the likelihood of customers recommending a company's product or service. It ranges from -100 to +100.
How It Works
- 1.Customers are asked: "How likely are you to recommend our product/service to a friend or colleague?"
- 2.Responses are on a scale of 0 to 10.
- 3.Customers are categorized: Promoters (9-10), Passives (7-8), and Detractors (0-6).
- 4.NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters.
Key Characteristics
- Simple and easy to understand.
- Provides a quick snapshot of customer sentiment.
- Correlates with business growth when used effectively.
Comparison
| Metric | Purpose | Scale |
|---|---|---|
| NPS | Customer loyalty | -100 to +100 |
| CSAT | Customer satisfaction | 1 to 5, or 1 to 7 |
| CES | Customer effort in interactions | 1 to 7 |
Real-World Example
Apple Inc. uses NPS to gauge customer loyalty, consistently reporting high scores that align with strong brand advocacy and sales growth.
Best Practices
- Use tools like SurveyMonkey, Hotjar, or Qualtrics for NPS surveys.
- Follow up with open-ended questions for deeper insights.
- Regularly track NPS to spot trends and act on feedback.
Common Misconceptions
- High NPS scores guarantee success. (They should be complemented with other metrics.)
- NPS is only for large businesses. (It's useful for all business sizes.)
- NPS is just a number. (It's a starting point for deeper customer insights.)