Net Promoter Score (NPS) is a customer satisfaction metric that measures how likely customers are to recommend a company’s product or service to others. It is calculated based on responses to the question: “On a scale of 0 to 10, how likely are you to recommend our company to a friend or colleague?” Customers are categorized as Promoters (9–10), Passives (7–8), or Detractors (0–6).
How is NPS calculated?
NPS = % of Promoters – % of Detractors For example, if 70% of respondents are Promoters, 20% are Passives, and 10% are Detractors: NPS = 70% – 10% = 60 This means the Net Promoter Score is 60, a positive indication of customer satisfaction and loyalty.
Why is NPS important for startups?
NPS is crucial for startups as it provides a clear measure of customer loyalty and the potential for organic growth through referrals. A high NPS indicates strong customer satisfaction, which can lead to better retention, positive word-of-mouth, and a competitive edge in the market. It also helps startups identify areas for improvement based on feedback from Detractors and Passives.
What is a good NPS score?
- Above 50 is considered excellent. - 0 to 50 indicates room for improvement but is still positive. - Below 0 suggests dissatisfaction and requires immediate action to address customer concerns. Startups should benchmark their NPS against industry averages and aim for continuous improvement.
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