Net Promoter Score…….all you need to know.

Every now and then, businesses come across circumstances wherein they need to know the wellness of their customer relationships. But since this is a very intangible entity, its wellness cannot be some number or any other empirical representation to gauge its wellness. But then if that is the problem, we ought to have a solution and that is what this blog is all about. In our next chunk of serial blogs, we will be discussing all about Net Promoter Score (NPS) and what you need to know about them.

Net Promoter or Net Promoter Score (NPS) is a management tool that can be used to gauge the loyalty of a firm’s customer relationships. It serves as an alternative to traditional customer satisfaction research and claims to be correlated with revenue growth.

Net Promoter Score was a customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, who undertook some research with Satmetrix.

The outcome of this was that they believed the single question that needed to be asked was “What is your likelihood to recommend company X to a friend or colleague.” Depending upon the response to that single question, using a scale of 0 to 10, the respondent would be considered one of the following:

Score Category 0–6 Detractor 7–8 Passive 9–10 Promoter

To obtain the actual NPS score the percentage of Detractors was deducted from the percentage of Promoters.

NPS can be as low as −100 (everybody is a detractor) or as high as +100 (everybody is a promoter). An NPS that is positive (i.e., higher than zero) is felt to be good, and an NPS of +50 is excellent. Explaining the terms used, a promoter is one who is definitely likely to recommend your business to others, detractors are those who will not recommend your business to others and then we have a chunk of passive customers who are kind of neutral in recommending your business.

Net Promoter Score (NPS) measures the loyalty that exists between a provider and a consumer. The provider can be a company, employer or any other entity. The provider is the entity that is asking the questions on the NPS survey. The consumer is the customer, employee, or respondent to an NPS survey.

This was a brief and concise explanation of what ups is all about. In our coming blogs, we will be posting more about what are the various aspects of NPS. Its merits, demerits and much more. Till then, say tuned at Fungru.

Originally published at FUNGRU.

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