What it is: NPS is a customer satisfaction metric that measures the likelihood of customers recommending a product or service to others. It provides insights into customer loyalty and brand advocacy.
Why it is important: NPS helps gauge customer satisfaction and loyalty, which are critical factors for a startup's success and growth. It indicates the level of customer engagement, brand perception, and the potential for customer referrals. A high NPS suggests strong customer satisfaction and increased customer lifetime value.
Formulas: NPS is calculated based on customer responses to a single question: "On a scale of 0-10, how likely are you to recommend our product/service to others?" Customers are then classified into promoters (9-10), passives (7-8), or detractors (0-6), and the NPS score is calculated as the percentage of promoters minus the percentage of detractors.
How to use it in the context of startups: Startups can use NPS to understand customer sentiment, identify areas for improvement, and build customer-centric strategies. By collecting NPS data and analyzing trends, startups can enhance customer satisfaction, prioritize product/service enhancements, and drive customer loyalty and retention.