As we have discussed above that NPS is a loyalty metric, a single question survey “how likely they would recommend the business or company to their associates, family or friends?” which is asked to the customers. The reply of this survey question is given as a rating on a scale of 0 – 10. This survey provides you a clear picture of the success and flourishing of your business. Based on the replies, the respondents are classified under the following categories:
Now, we will put some light on the process how this highly successful and proven loyalty metric, that is Net Promoter Score, is calculated. First of all, it is mandatory to calculate the percentage of the respondents labeled under both the categories, which are passives and detractors. Then, the percentage of detractors should be deducted from the percentage of promoters. This gives you the Net Promoter Score.
Let us now do it with an example to simplify it.
For instance: Suppose 500 consumers replied to the survey question asked by the company. The percentage of promoters calculated was 48% whereas for the detractors, it was 23%.
Net Promoter Score (NPS) = % of Promoters - % of Detractors
NPS = 48% - 23%
NPS = 25%
Hence, the NPS calculated is 25%.
Net Promoter Score, quite commonly known as NPS, is a gauge that tracks the loyalty of customers against any business or a company. Fred Reichheld, one of the board members of Satmetrics and also an associate of Bain & Co, designed and developed this loyalty metric. Since its inception, this tool has always been a point of core discussion for many professionals. The loyalty is assessed by asking a very simple question to the consumers, “How likely are you to recommend our business or company to your friends, colleagues or any other connections?”
In “The Ultimate Question”, one of the top selling books by Fred, Net promoter Score has been publicized as one of the vital metric for every business or company for its growth and to know how they are flourishing in the current scenario of the market. Now, it has become one of the most important tools and highly favored means of measuring the customer loyalty no matter what kind of business or company is it.
Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.
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