Net Promoter Score (NPS) is a metric for assessing customer loyalty for a company's brand, products or services.
Many companies use NPS as part of their customer relationship management (CRM) strategy because the metric is easy to calculate.
The company just has to ask their customers one simple question: “How likely is it that you would recommend us to a friend or colleague?”
Answers are assigned a score from zero to 10, with 10 being the most positive.
Customers are then divided into three categories: Promoters, Passives and Detractors.
Promoters (score: 9-10) are the most loyal, Passives (score: 7-8) are satisfied, yet unenthusiastic, and Detractors (score: 0-6) are unhappy.
The Net Promoter Score is calculated by subtracting the percentage of Detractors from the percentage of Promoters.
NPS was first introduced in a 2003 Harvard Business Review article by Fred Reichheld entitled “The One Number You Need to Grow.”
Reichheld felt that it was important for a company to know how many of its customers were assets and how many were liabilities.
By correlating the customer's subjective response to an objective number, the metric can be used to legitimately drive a company's internal priorities.