Net Promoter Score (NPS)

Net Promoter Score (NPS) is a customer loyalty metric that measures the likelihood of customers recommending a company or its products/services to others. It is widely used by businesses across different industries, including Software-as-a-service (SaaS) companies, to assess customer satisfaction and loyalty.

NPS is measured on a scale of 0 to 10, with 0 being “not at all likely” and 10 being “extremely likely”. Customers are asked to rate the likelihood of recommending a company or its products/services to others, and are then grouped into three categories based on their score:

• Promoters (score 9-10): Customers who are highly likely to recommend the company or its products/services to others.
• Passives (score 7-8): Customers who are satisfied with the company or its products/services, but are not likely to actively promote them.
• Detractors (score 0-6): Customers who are not satisfied with the company or its products/services, and may actively discourage others from using them.

To calculate the NPS score, the percentage of detractors is subtracted from the percentage of promoters. The resulting score can range from -100 (if all customers are detractors) to +100 (if all customers are promoters).

SaaS companies use NPS to measure customer satisfaction and loyalty and to identify areas for improvement. By tracking NPS over time, SaaS companies can assess the impact of changes and improvements to their products/services, and identify areas where they need to focus their efforts to improve customer satisfaction and loyalty.

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Similar Terms:

Customer Retention
Customer Retention Cost (CRC)
Customer Retention Rate (CRR)
Customer Winback