PMs & Metrics: Net Promoter Score (NPS)

During our last post of the PMs & Metrics series, we covered the details of retention rate. In today’s post, we’ll be going over another important metric that PMs should be familiar with – the net promoter score, also known as NPS.

For our discussion, let’s break it down into the following sections:

  1. Definition: What is the net promoter score?
  2. Measurement: How do you measure net promoter score?
  3. Impact: Why does the net promoter score matter?
  4. Insights: What insights does the net promoter score yield?
  5. Limitations: What are the shortcomings of the net promoter score?

Definition

The net promoter score is a great way to gauge how well you are serving your customers.

To calculate your net promoter score, all you have to do is ask this single question:

How likely is it that you would recommend this product to a friend or colleague?

Your respondents should be given a scale of 0 – 10, with 10 being “extremely likely” and 0 being “not at all likely”. You can then classify your respondents into the following 3 categories: Continue Reading

PMs & Metrics: Retention Rate

During our last post of the PMs & Metrics series, we covered the details of the conversion rate. In today’s post, we’ll be going over another important metric that PMs should be familiar with – the customer retention rate.

The customer retention rate measures the proportion of customers that have continued to use your product over a period of time. 

“Retention rate: proportion of customers that have continued to use your product over time.”

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There are two key phrases here to pay extra attention to – “continued to use” and “period of time.” Let’s break them down further.

“Continued to use” refers to customers that have been using your product, and does not include brand new customers. Keep this in mind because we’ll be seeing this concept again when we discuss the formula to calculate retention rate. Continue Reading