Why is Net Promoter Score® important for a brand?

Predictive analytics
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Divya Kandwal
September 25, 2019
mins read

NPS® or Net Promoter Score® is one of the most significant metrics for a company. In fact, Numr, a customer experience management (CXM) company believes it to be the pivotal metric for Customer Experience Management. Reason being, it measures Brand Health based on the loyalty of existing customers.

It is calculated based on merely one question. That is, “How likely are you to recommend us (product/service) to your friends and colleagues?

And, customers provide a rating on a scale of 0 to 10 (0 being the least and 10 the most)

Net Promoter Score® scale Numr Research Text Analytics customer feedback

Why is Net Promoter Score® important for a brand?

Undoubtedly, Net Promoter Score® is extremely important for a brand.

Therefore, here are the top reasons why.

Net Promoter Score®importance

1. It measures Customer Loyalty

Presently, the market is saturated with numerous choices for consumers. Therefore, customer satisfaction should not be the end goal for any company. To get ahead, the end goal must be Customer Delight and Customer Loyalty. Moreover, Customer Loyalty is an apt indicator of Brand health and future growth. Therefore, it is essential to continually assess and measure it. And, there is no better way to measure it than the Net Promoter Score® System.

Moreover, as per Forbes, it costs 5 times more to acquire a new customer, compared to retaining one. So not only is it easier to retain a customer, it is cheaper too.

2. NPS® Predicts Future Growth

Net Promoter Score® has a strong co-relation to growth. Since, Growth is massively dependent on Customer Retention and repeat transactions, NPS® accurately predicts it.

In fact, according to Fred Reichheld, increasing customer retention by 5% increases profits by 25% to 95%.

3. It quantifies Recommendation and Word of Mouth

Unsurprisingly, word of mouth advertising and recommendation from friends is the most convincing kind of advertising. And, NPS® provides a method to quantify and measure it.

4. NPS® is Easy to Understand

The beauty of the Net Promoter Score® lies in its simplicity. The entire NPS® exercise provides companies with one simple number. And, everyone from the frontline to the executives can easily understand it. It’s clean and hassle free.

5. Great for Benchmarking

It is important for companies to gauge where they stand compared to the competition. Since, Net Promoter Score® is a standard metric used by all leading organisations, it makes it easy to benchmark your company against your competitor’s.

In conclusion, the Net Promoter Score® is a crucial metric for companies looking to increase Retention and decrease Churn. Moreover, NUMR suggests that companies should make NPS® the focus of their CX Program.

*Net promoter Score® and NPS® are registered trademarks of Bain & Company, Satmetrix and Fred Reichheld

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