Net Promoter Score and why it matters to you and your business

Added by Love Business East Midlands | 30 January 2014

UPDATED: 3 February 2014

By Martin Rodgers

So you've gone out and generated lots of new leads, sales and life is good! Time for a lovely holiday in the sun celebrating your amazing success. Hang on though! one month down the line and a large chunk of those customers have deserted to your competitor. Now at this point most business owners go out and generate more leads. What a waste of time and effort.

 

In effect what you are doing here is filling a bucket with water and that bucket has holes. Rather than repairing the bucket you keep pouring water in the top. Surely, if you had a bucket with holes in it you would replace or repair, wouldn't you? It would be madness to keep pouring water in the top and expecting a different result.

 

 

How do I repair my bucket?  You need to focus on customer loyalty.

How do you focus on customer loyalty? We recommend starting with a metric called Net Promoter Score (NPS)

The Net Promoter Score (NPS) is a loyalty metric based on the principal that every company's customers can be divided into three categories:

Promoters: Loyal enthusiasts. They provide repeat business to a company and urge their friends to do the same.

Passives: Satisfied but unenthusiastic. These customers could easily be swayed by the competition.

Detractors: Unhappy customers. Have a bad or non-existent relationship with the company.

An easy way to measure success and track your business’ growth is to calculate the percentage of your customers who are Promoters (P) and subtract the percentage who are Detractors (D). This simple equation is how you calculate your Net Promoter Score:

P — D = NPS

While the concept itself is easy to grasp, NPS represents a fundamental change in the way companies manage customer relationships and organise for growth. Rather than relying solely on customer satisfaction surveys, businesses now use NPS to measure customer relationships as rigorously as they now measure profits.

Furthermore, NPS empowers business owners to hold employees accountable for treating customers fairly. It cements the link between the quality of a company's relationships and its prospects for growth.

One of the original companies behind NPS is Satmetrix who own copyright to the term Net Promoter Score.

For more information about Martin Rodgers click here.

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