What measure indicates customer loyalty and the likelihood of customers recommending a product?

The Net Promoter Score (NPS) is a widely recognized metric for assessing customer loyalty and the likelihood of customers recommending a product or service to others. It is derived from a single question typically framed as: "On a scale of 0 to 10, how likely are you to recommend our product/service to a friend or colleague?" Respondents are categorized into promoters, passives, and detractors based on their scores. This categorization provides a clear insight into the overall sentiment towards the brand and serves as a predictor of growth.

Companies that achieve high NPS scores often enjoy a more loyal customer base and benefit from positive word-of-mouth, which can lead to organic growth. The NPS is valuable because it captures customer perceptions and feelings towards the brand, going beyond just satisfaction to gauge true advocacy.

In contrast, other options like Gross Margin, Conversion Rate, and MRR (Monthly Recurring Revenue) focus on financial performance or transactional metrics rather than on customer sentiment and loyalty. While these metrics are important for overall business health, they do not directly measure how likely customers are to recommend a product, making NPS the most appropriate choice in this context.