Welcome to this comprehensive collection of lecture notes on marketing strategy MKT 401 in UniMannheim! These notes cover a wide range of essential concepts and techniques, including target market segmentation, the marketing mix, SWOT analysis, competitive analysis, customer personas, brand messagi...
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10.5 Net Promoter Score (NPS)
Net Promoter Score (NPS) is a customer loyalty metric that measures the likelihood
that a customer will recommend a product or service to others. NPS is based on a
single question: "On a scale of 0 to 10, how likely are you to recommend this
product/service to a friend or colleague?" Customers who answer 9 or 10 are
considered "promoters," those who answer 7 or 8 are considered "passives," and
those who answer 0 to 6 are considered "detractors."
To calculate the NPS, the percentage of promoters is subtracted from the percentage
of detractors. The resulting score can range from -100 to 100, with a positive score
indicating a higher likelihood of customer recommendation and a negative score
indicating a lower likelihood. NPS is typically used as a benchmark for measuring
, customer loyalty and can be used to identify areas for improvement in the customer
experience.
NPS has become a widely-used metric in customer experience management, as it is a
simple and effective way to gauge customer loyalty. It is particularly useful for
businesses that rely on customer referrals, as it provides a measure of how likely
customers are to recommend the business to others.
One of the key benefits of NPS is that it focuses on customer loyalty rather than
satisfaction. Customer satisfaction is a measure of how well a product or service meets
a customer's needs, but it does not necessarily indicate that the customer is loyal to
the brand. In contrast, NPS measures the likelihood that a customer will recommend
the brand to others, which is a stronger indicator of loyalty.
Another benefit of NPS is that it provides a simple, easy-to-understand metric that can
be easily tracked over time. By tracking NPS over time, businesses can identify trends
in customer loyalty and take corrective action to improve NPS.
There are several best practices for using NPS effectively. One key practice is to
consistently ask the NPS question and track results over time. This allows businesses
to identify trends and make meaningful comparisons between different time periods.
Another best practice is to follow up with customers who provide a low NPS score to
understand their concerns and address any issues. This can help to identify and resolve
problems that may be causing customers to be less likely to recommend the business.
In addition, it is important to use NPS in conjunction with other customer experience
metrics, such as customer satisfaction and customer effort score, to get a more
comprehensive view of the customer experience. By combining NPS with other
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