The Net Promoter Score (NPS) indicator is one of the most widely used indicators to measure customer loyalty to a company, in all fields of expertise.
This concept was developed by Fred Reichheld to determine the commitment and loyalty of customers. The NPS is a customer satisfaction indicator that targets the recommendation that your customers can make or not, towards your brand.
To calculate your NPS, it comes down to asking one simple question to your customers:
“How likely is it that you would recommend our company to a friend or colleague?”
The respondent is then given a standard scale that ranges from 0 (not at all likely) to 10 (extremely likely). Based on how a customer responds, he/she is classified into one of three categories:
Once each customer is classified into a respective category, your company’s Net Promoter Score can be calculated by subtracting the percentage of Detractors from the percentage of Promoters. It will be a number between -100 and 100.
As explained in Qualtrics’ blog:
Promoters are best described as your customers who are loyal and enthusiastic about your company and will continue buying and referring others. Promoter referrals fuel viral growth that you don’t have to pay for. The cutoff for Promoters is intentionally high at 9 to ensure that the customer is an exceptionally enthusiastic fan.
Passives are generally satisfied customers, but lack the enthusiasm seen in the Promoter group. A 7 or an 8 rating is no doubt impressive, but research has found that this group is vulnerable to competitive offerings and is therefore not immune to defection.
Detractors are a potentially dangerous bunch who are often unhappy and can diminish your brand through negative word of mouth. A customer who rates your company between a 0 and a 6 requires proactive outreach to resolve issues before damage is done.
Generally speaking, a Net Promoter Score that is below 0 is an indication that your business has a lot of work to do to improve its customer satisfaction levels.
If your NPS is higher than 30, it means you are doing great and have a lot more happy customers than unhappy ones. The higher your NPS, the more your company is generating positive word-of-mouth from your customers and the more likely referrals will convert into new leads and more revenue for your company.
In summary, the Net Promoter Score can definitely help your business. By calculating and improving your NPS, you will increase your customers’ loyalty, generate more positive word-of-mouth and more referrals, which leads to more revenue and higher profits.
Most companies use modern tools to keep track and to improve their Net Promoter Score over time. It lets them automate the feedback process.
We’ve built a modern tool called InputKit to help businesses calculate and improve their Net Promoter Score.
May 10, 2022
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