Consumer feedback is essential to running a successful business or marketing campaign. You need to know what you’re doing right – and wrong – to successfully grow your customer base. To gain customer loyalty, you must first be able to track it. Many companies across the country do this with Net Promoter Score (NPS).
What is NPS?
Great question. Fred Reicheld, a successful business author and strategist, introduced the Net Promoter Score, commonly referred to as NPS, in 2004. NPS is a customer loyalty metric that goes beyond basic customer satisfaction surveys to actually measure their level of loyalty to the company, not just how happy they are with the product, brand or service.
Many of the top organizations across the country use NPS as a valuable metric to track growing profit and customer loyalty. This critical score is earned based off of one simple question: How likely is it that you would recommend [insert brand name here] to a friend or colleague?
Respondents can answer this question on a 0 to 10 scale, where they’re grouped into three different categories based on their answer.
Promoters, passives and detractors
Respondents are broken out into three categories:
- Promoters. Promoters answer with a 9 or 10. They’re seen as enthusiastic about the brand as they will continue buying or telling others about the company, product or service.
- Passives. Passives rate the brand as a 7 or 8, which means that they’re less loyal to the company and are extremely vulnerable to competitors.
- Detractors. Anyone scoring less than a 7 is called a detractor. These consumers are mildly to extremely unhappy, and they may spread negative opinions about your brand and be extremely dangerous to your growth.
Calculating a score
To calculate a company’s score, the percentage of detractors is subtracted from the percentage of the promoters. Essentially, a company’s overall NPS score could be as high as 100, where everyone is qualified as a promoter, or as low as -100, where everyone is deeply dissatisfied and considered to be a detractor. Any score about 50 is fantastic, while anything lower than zero is generally unacceptable. Not to brag, but that’s why ReadyTalk is so proud of what we do. For a unified communication company, we an NPS score of 54 compared to Citrix (GoTo Meeting) which has 32.
Why does an NPS matter?
NPS provides an easy-to-use analytic tool for organizations to accurately gauge how loyal their consumers truly are. Instead of just answering yes or no to general satisfaction survey questions, or sifting through complex long-form answers, companies can receive a reliable score and begin to evaluate what they can do to improve their standing with their customers.
In a day where detractors can voice their anger or dissent with your brand to thousands of followers on social media, it’s more important than ever for organizations to get serious about tracking their customer loyalty. Using NPS is an excellent tool that empowers companies with the information they need to improve their customer relations.