Net Promoter Score (NPS)

Definition

The Net Promoter Score (NPS) is a key figure used to measure customer loyalty and satisfaction with a company. The score is determined based on a single question: “On a scale of 0 to 10, how likely is it that you would recommend our company to a friend or colleague?“ Responses are divided into promoters (9-10), passives (7-8) and critics (0-6).

Background

The NPS was developed in the early 2000s by Fred Reichheld, Bain & Company and Satmetrix. It should provide a simple and easy-to-understand way to measure customer relationships and loyalty. The indicator has spread quickly and is now used in numerous industries worldwide.

Areas of application

The NPS is primarily used in customer service, marketing and sales to assess customer satisfaction and identify areas of improvement. For industrial companies, it is particularly valuable for collecting customer feedback on products or services and for verifying the effectiveness of customer loyalty strategies.

Benefits

The main advantage of NPS lies in its simplicity and direct correlation with a company's growth. A high NPS indicates a healthy customer base and potentially better financial performance. The NPS also provides quick feedback that is easy to interpret and communicate.

Challenges

One challenge of NPS is that it does not provide differentiated insights into specific customer problems or needs. The reduction to a single key figure can also be misleading when viewed without context or additional data.

Examples

An industrial company could use NPS to improve the satisfaction of users of its B2B retailer portal. Through regular NPS surveys, the company can identify changes in customer satisfaction at an early stage and make appropriate adjustments to its service or product offering.

Summary

The Net Promoter Score is a widely used and effective way to measure customer satisfaction and loyalty. Despite its simplicity, it must be interpreted carefully and in the context of other customer feedback.