What is the Net Promoter Score? (NPS)

What is NPS®?

The Net Promoter Score is a customer loyalty metric originally formulated by Fred Reichheld, Bain & Company and Satmetrix in 2003. It segments customers into three types: neutrals, detractors and promoters.

The Net Promoter Score & Net Promoter System?

The original score is a customer satisfaction and loyalty indicator that measures the likelihood of customers to recommend a company, product or service to a friend or colleague.

The Net Promoter System takes the next step and turns results into action. Knowing the loyalty of customers in real-time, means companies can not only learn about their customers but are provided the tools to act immediately to improve each customer’s experience.

Widely used by Fortune 500 companies, the Net Promoter System creates tangible, usable feedback to help companies change what matters most – customer loyalty.

Calculating the Net Promoter Score

The Net Promoter question is easy, on a scale from 0 to 10 it asks customers:

“How likely are you to recommend (this company, this product, this experience, this representative) to your friends, family or business associates?”

Depending on their response, customers are divided into three categories:
detractors, passives, and promoters.

net-promoter-score

NPS is calculated by subtracting the percentage of detractors from the percentage of promoters.

Detractors (score 0 – 6) are your least satisfied customers. They may not purchase again and could spread negative word of mouth if something isn’t done to improve their experience.

Passives (score 7 – 8) aren’t typically satisfied, and their loyalty can’t be assured. They are susceptible to competitors offers, but will spread neither negative nor positive word of mouth.

Promoters (score 9 – 10) are loyal and enthusiastic. This group will renew contracts, are open to upselling and will tell others to do the same.

The Net Promoter Score is calculated by subtracting the percentage of detractors from the percentage of promoters, yielding a score between -100 to 100. A score of -100 means every respondent is a detractor while a score of 100 means everyone is a promoter. NPS is an indicator of your company’s health and is the first step to improving your customer’s loyalty.

Want to learn even more? Download our ebook on Net Promoter Surveying.

ebook about starting with Net Promoter®

 

Why Net Promoter?Screen Shot 2015-10-20 at 10.40.06 AM

At CustomerGauge, we believe that every company needs a Net Promoter System. Why, because it’s simple, actionable and supports future growth.

A simple way of understanding

NPS surveys are short (at least we strongly recommend they be), and are easy and quick to answer. This provides companies with high response rates and surveys that can be conducted at any point along the customer journey – if you have the right tool!

The Net Promoter System is simple. Within one platform it provides easy to understand loyalty scores, root causes and comments avoiding the need for complex market research.

Screen Shot 2015-10-20 at 10.48.30 AMAn actionable way of measuring

NPS data isn’t complicated. With just one score, customer comments and the reasons for the score, all received in real-time, companies can act immediately to create better experiences.

Actionable data means companies dig deeper with customers into root causes, resolve problems together, foster new sales, and lift responsiveness by proving to customers that their voice matters.

Waiting months for feedback to be collected isn’t very useful for today’s problems, but with NPS, acting on feedback can be a daily achievement.

Future growth should be the goal

Proven to be strongly correlated with growth by Fred Reichheld (the creator of NPS) and other researchers, NPS gives companies the power to turn customers into predictable recurring revenue.

With NPS, growth becomes operational. It provides companies with the tools to help customers stay longer, spend more, buy additional products, refer new customers and create cheaper-to-service customers.

Download this free ebook to learn how to setup a Net Promoter® Survey process.

ebook about starting with Net Promoter®

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