The Net Promoter Score (NPS) is perhaps the best-known customer loyalty metric and has been widely adopted by more than two thirds of Fortune 1000 companies. Developed by F. Richheld, Bain and Co and Satmetrix in 2003 in his Harvard Business Review article, titled, the One Number You Need to Grow it’s a measure of how your customers rate their likelihood to recommend your company to a friend or colleague on a 10-point scale. The responses to that question then categorize your customers into three groups: Promoters, Passives and Detractors.
On a scale of 0 (zero) to 10 (ten), with zero being not likely and ten being highly likely, how likely would you recommend (your company) to a friend or colleague?
NPS Promoters: Those who rated their likelihood 9-10. These are you loyal advocates; your most loyal customers.
Passives: Those who rated 7-8. Passives are neutral or ‘on the fence’. They don’t feel strongly positive or negative about your company or brand.
Detractors: Those rated 0-6 and are likely to make negative comments about your brand.
Your company’s score is a calculation of Promoters less Detractors
% Promoters – % Detractors= NPS
NPS Alone Does not Answer the Why? Question
Beyond this single measure, it’s critical to probe further with qualitative research as to the reasons why the rating was given. Additional topics to explore through in-depth discussions should include perceptions of product quality, customer service, leadership, delivery, and technical support to name a few. Understanding the background for customer perception oftentimes exposes opportunities for change. Taking action on this customer feedback can move a customer up this loyalty scale.
Are you missing opportunities?
It’s great to have a large # of Promoters and it makes sense to spend time to increase their numbers, but so much more can be gained if we engage this audience. Consider actively involving individuals from this group in referrals and references that can be used in a variety of areas in your sales and marketing materials. Web content, press articles, bid proposals, presentations, blogs, videos and user groups are just a few areas where Promoters can bring value to your company.