Net Promoter Score (NPS)
Net Promoter Score is a customer loyalty metric developed by Fred Reichheld, Bain & Company, and Satmetrix Systems. Introduced in 2003 (Who introduced it in 2003?), NPS is a management tool used to gauge the loyalty of a firm’s customer relationships. It measures customer response on a scale of 0 to 10 on the likelihood of a customer to recommend a company’s services or products to others.
Those who provide a score of 9 to 10 are called Promoters as they are likely to refer the company’s services or products, and will remain loyal to the company and keep buying services or products.
Scores of 7 and 8 are called Passives, satisfied customers but are likely to move into other competitive products or services.
Respondents of 0 to 6 are called Detractors. These are unhappy customers who will not purchase again from the company. They could damage the company’s brand through negative word of mouth.
The overall Net Promoter Score for a company is calculated by subtracting the percentage of customers that are detractors from the percentage of customers that are promoters. The score falls between -100 and +100. Any score over +50 is considered exceptional.