Nurturing existing relationships is vital to growing your business and creating loyal customers. The Net Promoter Score provides a simple yet elegant way to find out who your promoters are.
Why recommendations are important
› 65% of new business is generated by recommendations
› 83% of satisfied customers say they are willing to recommend a product or service
› A recommended customer has a 16% higher CLV (customer lifetime value)
› Promoters visit their favourite brands 9 times more often than others
› The likelihood of buying is 4 times larger when recommended by a friend
NPS stands for Net Promoter Score and is a proven, survey-based method for measuring customer satisfaction.
It is based on one single question “On a scale from 0 to 10 – how likely is it that you would recommend [the company] to a friend or colleague?” This likelihood to recommend is then used an indicator of customer loyalty.
Respondents in the NPS survey provide scores on a 10-point scale, where 0 is “not likely” and 10 is “very likely”.
Respondents with a score of 9 or 10 are called “Promoters”, and are considered most likely to show value-creating behaviours such as buying more, remaining customers for a longer time and giving several positive recommendations to other potential customers.
Those scoring between 0 and 6 are classified as “Detractors”, and are believed to be less likely to have value-creation behaviour. Those scoring 7 or 8 are labelled as “Passives” and regarded as neutral, but are obviously of interest for conversion to “Promoters”.
You calculate the Net Promoter Score by subtracting the percentage of Detractors from the percentage of Promoters. Passives are included total number of respondents, but have no direct effect on the overall net score.
NPS =% Promoters (9-10) -% detractors (0-6) Your NPS can range from a low of -100 to a high of 100. Anything above 0 is considered OK, while a score above 50 is exceptional.
Why use NPS?
› You get a quick picture of what your customers think of you
› You get a score that is comparable to others in your industry
› You save your customer’s valuable time by streamlining your customer surveys
› You can benefit from using the NPS surveys internally
› You can use a long-term approach to your measurements
› You and your company can see what your areas of improvement are
› You can create visualizations of the results for your company, to create a common picture of what your customers think of you
› By analyzing the results, you can allocate the right resources to the right area for improvement