The Net Promoter Score (NPS) is an index based on the question "How likely are you to recommend us?" and measures the likelihood of your customers recommending your product or service.
The score gives you a feeling about brand perception and your chances of receiving word of mouth advertising.
Adaption
The same metric can also be calculated on an annual basis (Annual Recurring Revenue). This can make sense, for example, when the minimum subscription period is one year.
Calculation
The Net Promoter Score is based on the outcome of the following question: "How likely is it that you would recommend us on a scale of 1 to 10?"
The answers are clustered as follows:
1-6: detractors
7-8: neutral
9-10: promoters
Promoters (in percent)
- Detractors (in percent)
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NPS
A company asks their users how likely they are to recommend their service: 20% answer with a score between 1 and 6, 40% with 7 or 8 and 40% with a score of 9 or 10.
40%
- 20%
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+ 20