What is NPS (Net Promoter Score) in Product Management?
NPS, or Net Promoter Score, is a metric that helps Product Managers measure customer loyalty and identify opportunities for improvement by finding out how likely customers are to recommend your product to others.
The Role of NPS in Product Management
What is NPS?
Net Promoter Score, or NPS, is a customer satisfaction metric that measures how likely customers are to recommend your product. NPS is calculated based on the simple question: “On a scale of 0-10, how likely are you to recommend our product/service to a friend or colleague?”
Customers are then divided into three categories based on their answers:
Promoters (score 9-10)
Passives (score 7-8)
Detractors (score 0-6).
Your product’s NPS is then calculated by subtracting the percentage of Detractors from the percentage of Promoters.
For example, if 60% of your survey respondents were Promoters, 30% were passives, and 10% were detractors, your NPS would be 60-10 = 50.
How is NPS used in Product Management?
Product Managers use NPS to see how people are responding to your product in the real world. Your NPS can be used as a gauge of customer loyalty, help identify areas for improvement, and drive product innovation. NPS can also be used to benchmark against competitors and industry standards, putting your product’s performance in context.
Why is NPS important in Product Management?
A product’s NPS provides a clear, quantitative measure of customer satisfaction and loyalty. This information can be used to prioritize product improvements, identify areas of the product that are working well, and target customer segments that are most likely to be loyal advocates. Focusing on improving NPS, can help Product Managers drive Product-Led Growth and increase customer retention.
When to use NPS in Product Management?
While NPS can be used throughout the product lifecycle, from ideation and development to launch and post-launch, it is especially useful during the product development process to identify customer needs and validate product ideas. After launch, you can continue to use NPS to monitor customer satisfaction and identify areas for improvement. NPS typically changes over time—by tracking these changes, you can see how ongoing Product Development is being received by the customer.
Net Promoter Score in action
“When we first launched our product, our NPS was in the low 20s. We used the feedback from our customers to identify areas for improvement, and made several changes to the product based on that feedback. Over time, our NPS improved to the high 60s, and we saw a corresponding increase in customer retention and referrals.”