NPS Best Practices

What is Net Promoter Score® or NPS®?

Written by: Kushal Dev | Co-founder, Customer Guru

The Net Promoter Score® is a loyalty metric developed by Fred Reichheld, a fellow at Bain and Co. In 2003. It is a management tool widely replacing the traditional customer satisfaction (CSAT) research and is being used by global brands to gauge the loyalty of their client relationships.

The Net Promoter Score® is based on the fundamental construct that by asking one simple question –

“How likely is it that you would recommend our company/product/service to a friend or colleague?”

Measured on a scale of 0 to 10 every company’s customers can be divided into three categories

  1. Promoter (Score 9 and 10) These are loyal enthusiasts who will keep buying and referring others thus fuelling organic growth
  2. Passives (Score 7 and 8) These are satisfied but unenthusiastic customers who would easily switch to a better offering
  3. Detractor (Score 0 to 6) These are vocally unsatisfied customers who damage your brand and impede growth through negative word of mouth

NPS = % Promoters – % Detractors

Net promoter provides easy and quick customer feedback. The power of NPS, however, is not driven from data collection but from using this data effectively. Its easy to collect data using any of the survey tools available online but can effective data collection alone lead to NPS success? The real value is in evaluating this data effectively and deriving actionable insights so you exactly know the actions you need to take to delight your customers. An organization striving for NPS success needs to realize that NPS is not just about measuring customer loyalty but also a way of doing business. NPS should be seen as a change agent that transforms an organization into a customer-centric one.

Disclaimer: Net Promoter, Net Promoter Score, Net Promoter System, and NPS are trademarks of Satmetrix Inc., Bain and Co., and Fred Reichheld.

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