How To Calculate Your Score
- Ask Just One Simple Question
- The Net Promoter Score (NPS)
- The Link To Long-Term Corporate Growth
- Analyze Your Company's Score
Ask Just One Simple Question
There is one question that provides the best predictor of customer loyalty and for the vast majority of business: How likely is it that you would recommend (Company X) to a friend or colleague? The "Net Promoter Score" or NPS, is simply the percentage of customers whose answers identify them as promoters minus the percentage whose response indicates they are detractors. Comparable to a financial net worth that takes the assets minus the liabilities, NPS provides a customer net worth by subtracting the liabilities (detractors) from the assets (promoters). NPS provides the single most reliable indicator of a company's ability to grow. Companies that have pioneered the use of this metric are way out ahead of their competitors. In most industries, the Net Promoter leader has superior growth - averaging more than twice the rate of their competition.
Three Categories of Customers
NPS is based on the fundamental perspective that every company's customers can be divided
into three categories. Customers can be categorized according to their answer to the Ultimate
Question based on a 0-to-10 point rating scale with "0" representing the extreme negative and
"10" representing the extreme positive end.
- Promoters (those who answer 9 or 10) are loyal enthusiasts who keep buying from a company and urge their friends to do the same.
- Passives (those who answer 7 or 8) are satisfied but unenthusiastic customers who can be easily wooed by the competition.
- Detractors (those who answer 0 through 6) are unhappy customers trapped in a bad relationship.
Correlation between Recommend Ratings and Actual Purchases and Referral Rates for Cable and Telephony Customers
Source: The Power Behind a single Number: Growing Your Business with Net Promoter, a Satmetrix White Paper.
