What is a Net Promoter Score (NPS)?
Feb. 23, 2019, 5:33 p.m.
The NPS customer loyalty index (Net Promoter Score, net support index) is an easy-to-calculate metric aimed at assessing the loyalty of a company's customers or customers of a product. It is believed that the NPS index is closely correlated with the company's revenues, and a company with a high NPS index tends to grow much faster than its competitors. This indicator is based on the assumption that customer loyalty to the company consists of:
- Wishes to make repeat purchases
- Positive attitude to the sale (purchase of additional accessories)
- Recommendations of the company among friends and acquaintances
- Honest and open feedback on products and services of the company
The NPS index is considered by many foreign and domestic experts to be one of the best indicators of loyalty to a company or product. The standard approach to measuring consumer loyalty index usually consists of several stages.
Knowledge of the NPS indicator clearly demonstrates the company's “reputational weight” in the eyes of customers and the calculation of this metric is a good indicator from the category of “is everything okay with us”? Thus, ease of calculation, fast data collection speed and comparability with the main players in the industry are the main advantages of this method. The general rule of the NPS methodology is: “the indicator should not be negative.”
The positive value of the indicator signals that the share of supporters of the "promoters" of the company exceeds the number of "critics", therefore, there is a certain potential for the natural growth of the customer base solely due to the loyalty of customers, in the very case when a satisfied client leads another client.
A zero or negative indicator indicates that the number of “critics” prevails over the number of “promoters”, and this, in turn, is a clear signal to the lack of growth potential of the customer base and even the possible outflow of customers due to the low rating of the company.