Is NPS a Good Indicator of Customer Loyalty?

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The net promoter score has been used widely as a key measure for customer loyalty. Is it a good indicator of loyalty though?

On a scale of 1-10, customers who give your business a ‘9’ or ‘10’ would likely keep buying your products and services, and they would refer others. Those who give you a score of 6 and under are detractors. To compute the net promoter score, you subtract the % of detractors from the % of promoters from your survey responses.

The net promoter score measures intention, which is the likelihood of buying again or referring your business to others. You don’t know if the customer would actually do so.

To have a better gauge for customer loyalty, it is better to measure repurchases. Repurchases are concrete demonstrations of loyalty.

There are many factors that affect customer loyalty. For example, purchase experience, delivering on promised value, and after-sale support. The net promoter score is a proxy measure for customer loyalty only. There is a difference between intention and real loyalty action.

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