What is Net Promoter Score (NPS)?

Off the top of your head do you know what your Net Promoter Score is?  Your NPS is a helpful number to know because it allows you to gauge your company’s performance by  evaluating positive word of mouth (PWOM).  Net Promoter Score is calculated by asking customers the question, “How likely is it that you would recommend [Company X] to a friend or colleague?”  In answering the question on  a 1-10 scale the customers are broken into three  categories : Promoters, Passives, and Detractors.

  • Promoters (score 9-10) are loyal users who consistently participate and refer others, contributing to growth.  Also provide user feedback.
  • Passives (score 7-8) are pleased but unenthusiastic customers who are susceptible to competitors.  Not avidly sharing.
  • Detractors (score 0-6) are dissatisfied customers who can disrupt your brand and disturb growth by negative word-of-mouth in person and on the internet (posting, commenting, etc)

1. Evaluate customers/users

2. To calculate the actual NPS: take the % of customers who are Promoters and subtract the % who are Detractors.

Why Care?

This score allows you to see your company’s performance based on your most imperative indicator, your customers.

Studies show that company’s with better ratio of Promoters to Detractors tend to grow more rapidly than competitors.  Moreover your NPS is  used to adjust pay, predict sales, and predict  profits.

Not satisfied with your score?

It is time to evaluate your company internally. To improve a score the focus should be on employees developing positive and constructive relationships with customers. The three categories allow employees to easily target the group that needs the most attention.  The ultimate goal is to turn all customers into promoters, by providing premium customer experience.   In, turn these customers will ignite growth and good profits by becoming the marketers for your company.

  • Southwest Airlines exemplifies a high NPS by contributing to custumer delight by: Providing customers with high service quality, charity involved, eco friendly, large amounts of discount seats, innovative and comfortable style, and best value compared to other airlines.

Compare

  • 50% to 80%. NPS Rating equate to most efficient growth
  • 5 %to 10% Average

Alternative ways to calculate positive word of mouth ratings

  • American Customer Satisfaction Index (ACSI)- measures the satisfaction of consumers across the U.S. economy by conducting interviews asking about their satisfaction with the products and services that they consumed.  (0-10 Score). There are benefits and shortcomings to both, but both look directly to custumers for answers.

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