To survive and thrive in today’s digital, customer-driven, market environment, you need to stay one step ahead of your customers. Customer’s, empowered with social media and consumer reviews sites, can help build your business or destroy your business with their online reviews.
One simple way to measure customer loyalty for your business, product, or service is to use the Net Promoter Score (NPS) introduced in 2003 by Fred Reichheld and Bain & Company. The NPS serves as an alternate method to traditional customer service satisfaction surveys where any person can administer the survey.
How NPS Works
The Net Promoter Score calculation is based on customer responses to the ultimate question: “How likely is it that you would recommend our company, product, or service to a friend or colleague?”
Based on an 11-point scale respondents giving a score of 0 to 6 are known as detractors. Respondents providing a score of 7 or 8 are passives, and respondents giving a score of 9 or 10 are known as promoters. See table below for description of each NPS category.
|NPS Respondent Categories and Scores|
|Promoters||9-10||Loyal enthusiasts who will refer others and keep buying from your organization.|
|Passives||7-8||Satisfied customers, but lack enthusiasm. These customers are vulnerable and at risk of leaving for the competition.|
|Detractors||0-6||These are unhappy customers who can damage your brand, giving negative reviews and word-of-mouth.|
The Net Promoter Score is calculated by subtracting the percentage of respondents who are detractors from the percentage of respondents who are promoters. The NPS is represented as a number, not percentage, between -100 — where 100% of the respondents mark 0 — and 100% — where 100% mark 10 on the survey. Passives are used to calculate the average percentage, but not used in the final calculation for arriving at the Net Promoter Score.
The organization or business must adopt the concept of using the NPS to gauge customer loyalty and providing support to customer who give a low NPS score. Customers who respond as either detractors or passives should be priority and a follow-up call given to decide how the organization can correct what caused the customer to give a low score.
How to Deploy an NPS Survey
The Net Promoter Score is typically deployed following a sale or service call. Using either internal or external email platforms, organizations can send customers the NPS survey. SurveyMonke.com offers pre-designed NPS templates for gathering customer data easily.
For more information on the Net Promoter Score, try one of the recommended readings listed to the right (top if you are on a mobile device) or visit this site.