Definition: Net Promoter Score (NPS) is a customer loyalty metric that gauges the likelihood of customers to recommend a company, product, or service to others. It is calculated based on responses to a single question: "How likely are you to recommend our company/product/service to a friend or colleague?"
Calculation: Customers respond on a scale from 0 to 10, with 0 being extremely unlikely and 10 being extremely likely. Respondents are categorized as Promoters (9-10), Passives (7-8), or Detractors (0-6). NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters, yielding a score between -100 and +100.
Importance: NPS is a widely used indicator of customer satisfaction and loyalty, providing insight into customer sentiment and potential growth through word-of-mouth. A higher NPS suggests a larger proportion of satisfied customers who are likely to refer others, contributing to business growth.
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