in Business

What is Net Promoter Score

The Net Promoter Score is a tool you can use to measure how loyal your customers are to your business. It was developed in 2003 by Fred Reichheld, a New York Times best selling author, speaker and business strategist.

According to Net Promoter Network, a high Net Promoter Score is an indicator of growth.

Likely to recommend

First of all, you need to ask a simple question to your customers:

How likely is it that you will recommend my company/product/service to a friend?

They can answer with any number between 0 and 10. It’s obvious that if they like your product and how you treat them, you’ll get a really high number. If they perceive you as a bad experience, someone who doesn’t care about them or doesn’t really have what they need, be prepared to get really crappy numbers here.

For example you can send an email to everyone of your customers asking them that question. They can respond directly to that email and thus the connection will be more personal than if you send them a link to an external survey.

Types of customers

This method defines three types of customers: Promoters, Detractors and Passives.

Provided that you already have your customers’ answers, you categorize them as one of those three types:

What is Net Promoter Score

Promoters (9 – 10).- This are the type of customers that will provide you with more value because it’s more likely they’ll do things as telling their friends about your biz, buying more from you and staying longer with you (they love you).

Detractors (0 – 6).- They don’t give a damn about your business. They can get away at anytime and you’ll never see them talking with their friends about you (they probably are not comfortable with you).

Passives (7 – 8).- They are satisfied with your business but your competitors can easily attract them to their offers.

Measuring Net Promoter Score

Measuring Net Promoter Score

You sum up all the customers of every category and calculate their percentages of the total. Once done, you subtract the percentage of Detractors from the percentage of Promoters (ignore the Passives). The number you get from that operation is your Net Promoter Score.

For example if you’ve got 350 promoters, 26 detractors and 124 passives (500 voters total), you’d do:

350 / 500 * 100  = 70%

26 / 500 * 100 = 5.2%

70% – 5.2% = 64.8%

NPS = 64.8% <== An excellent Net Promoter Score

The Net Promoter Score can be as low as -100 or as high as +100. When an NPS is higher than zero is good but when it’s higher than +50 is excellent.

Additional feedback is good

If you want to know why a customer rated your company a certain way, just ask them! You can then follow them up and ask for additional information that will help you to improve their experience and perception about you.

Hence, if they are Detractors, you will know why they gave you such a bad number and address their problems. Thus you’ll have the opportunity to convert them to a Promoter. If they are Promoters you will discover the things that make your company valuable to your customers.

Conclusion

The Net Promoter Score is a great way of discovering if your customers are getting a good experience from your product. As a matter of fact, if you ask for additional feedback you can be aware of the problems or customer pains you need to address in order to make them happy and be more loyal to your brand.

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