Based on work by Fred Reichheld (Bain & Co) Net Promoter Score (NPS) is a metric that companies use to measure customer satisfaction and, in turn, to inform issues such as brand health and growth potential.  It is a score that is relatively low cost to gather, quick to analyse and easy to share.  However, NPS can be controversial and has been criticised, particularly in terms of its ability to predict brand growth. NPS advocates insist NPS can mask the scale of detractors and underestimate the power of influential promoters but it remains an effective way to focus an organisation on the value of customer service, product quality and the sales process.

Definition

Consumers are asked if they would recommend a product to a friend, using a ten-point scale for their likelihood of doing so.  Negative responses, i.e. where they are unlikely to recommend, are subtracted from positive responses to give the NPS.  Anyone with a net score of 9 or 10 is considered to be a promoter.  Growth in the NPS score is often a result of improved customer relations and a good predictor of revenue growth.

Key insights

1. The value of NPS is its simplicity