What does the term "Net Promoter Score" (NPS) measure?

Net Promoter Score (NPS) is a widely used metric that assesses customer loyalty and satisfaction. It is derived from a single question survey asking customers how likely they are to recommend a company's product or service to others, typically measured on a scale from 0 to 10. Based on their responses, customers are classified into promoters, passives, and detractors, which provides insights into overall customer sentiment and allegiance to the brand.

The beauty of NPS lies in its simplicity and focus on customer advocacy. It effectively captures the likelihood of customers to recommend the business, directly linked to their satisfaction and loyalty levels. High scores indicate a strong base of loyal customers who support the brand, while low scores highlight areas needing improvement to enhance customer experience.

Understanding NPS is crucial for businesses as it not only gauges customer relationships but also serves as a predictor of business growth. Companies can utilize this data to implement strategies that bolster customer satisfaction, thereby improving retention and reducing churn over time.