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What is Net Promoter Score? (NPS)

What is Net Promoter Score? (NPS)

What is Net Promoter Score?
Net Promoter Score (NPS) is a management tool that can be used to assess customer loyalty. It is an index from -100 to 100, which processes the tendency of customers to recommend the company's products or services to others. It is used as a proxy for assessing overall customer satisfaction from a company's product or service and customer loyalty to the brand.

The main reason for the popularity of Net Promoter Score is that it is user-friendly.

If the company has more critics than the promoters, the result will be negative and vice versa.

Net Promoter Score provides industries and start-ups with simple and direct characteristics that can be shared with first-line employees.

The Net Promoter Score is helpful because it can be used as a motivation for employees to improve and provide the best possible customer service. The ultimate goal is to convince customers who were not happy or dissatisfied, to promote who will give the word and allow you to increase your income and profits.

A higher promoter net result can take your business to great heights while a lower promoter net result can trigger a landslide for your business & so it is high time for you to concentrate on potential customer satisfaction and loyalty issues.

You can calculate Net Promoter Score online here on NPS Calculator
The Net Promoter result is calculated based on the answer to one question: What is the probability that you would recommend our company/product/service to a friend or colleague?

Scoring for this answer is most often based on a scale from 0 to 10.

Those who have reacted with the score 9 to 10 are called Promoters and are believed to be able to show value-enhancing behaviors, such as buying more, staying on longer, and generating positive recommendations for other potential customers.

Those who respond with a grade from 0 to 6 are labeled "Critics" and are considered to exhibit less valuable behavior. Answers 7 and 8 are marked as passive, and their behavior falls on the promoters and opponents.

To calculate the Net promoter score, you have to find the % of customer who is promoter and detractor and after that, you have to subtract the percentage of detractors from the percentage of promoters.

Net Promoter Score = % of Promoters – % of Detractors

And in order to calculate the result of the Organizer, passive count towards the total number of respondents, thus reducing the percentage of opponents and promoters and moving the net result towards 0.

Companies are encouraged to follow a question that can be recommended, with an open request for development, with a request to justify the client's assessment of that company or product. These reasons can then be passed on to first-line employees and management teams for follow-up.

For example, local office managers at the Charles Schwab Corporation urge clients to engage them in discussing the feedback provided by the NPS survey to process solve problems and learn more so that they can train account representatives.

Fred Reichheld and Bain colleague Rob Markey, co-authors of The Ultimate Question 2.0 said the assessment and the answer to the question "Why?"

The question contains everything that is needed to identify reference clients and opportunities for improvement. This may happen, but the lack of an easy way to automatically analyze full responses without human bias is problematic. The answer of many companies to the problem was adding additional questions in the assessment scales.

Additional questions can be included to help you understand the perception of various products, services, and business lines. These additional questions help the company assess the relative importance of these other parts of the enterprise in the overall result. This is particularly useful in targeting resources to address issues that have the greatest impact on NPS. The necessity of a software as a service provider is on the rise amongst companies willing to employ the Net Promoter System as they offer a full set of customization option on data, reports, and analysis.

The most important objective of the Net Promoter Score methodology is to assess customer loyalty towards a brand or company. The ability to measure customer loyalty is a more effective methodology to determine the likelihood of a customer buying again, discussing the company and resisting market pressure on a competitor's defect.

Loyalty measurement can be carried out in several ways, and researchers say there are better predictors of actual recommendations than the question "likelihood of recommendation".

Since the goal of the Net Promoter is not to anticipate the actual recommendations, but to anticipate a full set of financially beneficial behaviors, proponents of the methodology do not consider this a problem.

The Net Promoter System involves a loop closing process. The loop closing process is a healing process where the provider actively communicates with the concerned customer to know the shortcoming in the service that leads to a negative perception, often turning a Detractor into a Promoter.

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