What is Net Promoter Score and why is it important to your business?

It is good business practice to ask your clients on an annual basis how you’ve performed over the last 12 months. Within this survey, there should be one key question which will help you develop your business further.

Introducing the Net Promoter Score (NPS).

Net Promoter Score is a powerful tool in gauging customer loyalty and, by extension, company health. Customers service has ritually been used in the past, and one of the questions asked was “Would you recommend us (as a business) to colleagues and peers?”. The answers would be “Yes” or “No”. Using NPS is a more scientific method of drilling into the results and understanding more about your customers’ needs, wishes and attitudes.

NPS also provides a healthy barometer on how competitive you are, and where you can evolve your offering. In brief, Net Promoter Score (NPS) programs ask just one quantitative question:
“How likely are you to recommend this business to a friend or colleague?”

Net Promoter Score definition
The Net Promoter Score is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company’s products or services to others.

Based on their rating, customers are then classified in 3 categories: detractors, passives and promoters, and these are outlined below:

Promoters
‘Promoters’ answered 9 or 10. They love the company’s products and services. They are the repeat buyers, and are enthusiastic evangelists who recommends you to potential buyers.

Passives
‘Passives’ gave a score of 7 or 8. They are somewhat satisfied but could easily switch to a competitor’s offering if given the opportunity. They probably wouldn’t spread any negative word-of-mouth, but are not enthusiastic enough about your products or services to promote further.

Detractors
‘Detractors’ gave a score lower or equal to 6. On this basis, they are not particularly thrilled by the product or the service. The likelihood is they won’t purchase again from you, which could damage your company’s reputation through negative word of mouth.

How do you calculate NPS?
Ultimately, this is determined by subtracting the percentage of customers who are detractors from the percentage who are promoters. What is generated is a score between -100 and 100 called the Net Promoter Score.

NPS should not be used in isolation
Your Net Promoter Score is not a standalone tool. As a business and a management group, this is not the be all and end all. Yes, it will give you an insight into customer thinking, but senior management sponsorship is an absolute to a year-round programme of activity to ensure you are always reaching for greatness, rather than nervously waiting for your 12-month audit of delivery.

Some caution is therefore required. It is obvious that the NPS on its own may not be sufficient as a management tool, but in the right framework and with some additional motivational questioning it can undoubtedly be a useful metric.

Next steps
If you’d like to discuss your questionnaire, in which NPS is a part, at OMM we have 20 years’ experience in delivery of such surveys, so you couldn’t be in better hands.

Contact us:
T: 01442 503723
E: chris@olivermyles.co.uk