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Net Promoter Score is a loyalty metric used to measure the rate at which customers would refer the company’s products or services to their friends and family. Net Promoter Score is a proxy for gauging the customer’s overall satisfaction and is different from customer satisfaction. Though Customer Satisfaction Score is intricately related to Net Promoter Score, the two are different in essence. The former checks how satisfied a customer is, he/ she may like your brand, but might like some other brand more and might buy from other brands when their deals are better. A Promoter, on the other hand, not only sticks to your brand but advocates for it as well.
Net Promoter Score Survey
The main question asked to measure Net Promoter Score is, "How likely are you to recommend the brand to a friend, relative or colleague?". It is often called as ‘The Ultimate Question’ to measure a customer’s loyalty.
The respondents are asked to answer the question on a 10 point scale. On the basis of where their answers lie on this scale, the respondent customers are kept under 3 basic subcategories:
1. DETRACTORS: Scores between 0 - 6
These are the customers who are unhappy with your brand. They are also the ones who are most likely to give a negative review to your company and hurt its image.
2. PASSIVES: Scores between 7 - 8
These customers are satisfied and might even like your company, but they might like some other company better. They will easily switch to another company if they find a better deal.
3. PROMOTERS: Scores between 9 – 10
These customers love your company, they stick to your products and services and even recommend it to other people.
Count the total number of Promoters and the total number of Detractors. Now apply this simple arithmetic formula: (Promoters — Detractors)/(Respondents) x 100 The Net Promoter Score is a number obtained from this formula, that will be expressed as a percentage.
Why gauge the Net Promoter Score
A company’s NPS tells it how likely a customer is to promote the concerned company, stick to it even after being offered more lucrative deals from the company’s competitors and buy more products from the same company.
Knowing who are the promoters and detractors and how many of them exist makes it very important for any company and NPS survey allows a company to know just that. The concerned company can then target the promoters and make the most of them as they are the ones who will spread a good word or recommend the company’s products and services. It should also try to appease the detractors as they are the ones who are likely to spread a bad word about the company.
A company’s Net Promoter Score tells it how well it is doing against its competitors or compares itself to its counterparts in different markets. This kind of healthy competition is necessary for the company to not think that it is the only provider in the market. Sometimes it also gives the company an incentive to perform better in order to outperform its competitors.
Bain and Co found that there is a correlation between the Net Promoter Score and the growth of a company. On average, the scores of a leader in an industry were twice that of his competitors. This is another reason why a company would try to keep its NPS high.