Project Management Institute (PMI) Professional in Business Analysis Practice Exam

What does the Net Promoter Score measure?

1. Product sales performance

2. Customer loyalty

3. Employee satisfaction

4. Market share

The correct answer is: Customer loyalty

The Net Promoter Score (NPS) is a widely recognized metric used to gauge customer loyalty and the likelihood of customers to recommend a company's products or services to others. It operates on the premise that companies can improve growth by focusing on their most loyal customers, who are identified through this score. To derive the NPS, customers are typically asked a straightforward question: how likely they are to recommend the company or its offerings to friends or colleagues, usually rated on a scale from 0 to 10. Based on their responses, customers are categorized into three groups: promoters (rated 9-10), passives (rated 7-8), and detractors (rated 0-6). The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. This score reflects customer sentiment and gives valuable insights into customer loyalty, overall satisfaction, and potential for future business growth. By focusing on customer loyalty rather than just sales performance, employee satisfaction, or market share, NPS provides a more holistic view of how well a business is fostering lasting relationships with its customers, driving engagement, and enhancing its reputation in the market. Thus, measuring loyalty through NPS can guide a company’s strategic decisions and customer service initiatives effectively