Measuring Your Net Promoter Score
Asking the ultimate question allows companies to track promoters and detractors, producing a clear measure of an organization's performance through its customers' eyes, its Net Promoter Score®. Bain analysis shows that sustained value creators—companies that achieve long-term profitable growth—have Net Promoter Scores (NPS) two times higher than the average company. And Net Promoter System® leaders on average grow at more than twice the rate of competitors.
Bain's Net Promoter System is based on the fundamental perspective that every company's customers can be divided into three categories. "Promoters" are loyal enthusiasts who keep buying from a company and urge their friends to do the same. "Passives" are satisfied but unenthusiastic customers who can be easily wooed by the competition. And "detractors" are unhappy customers trapped in a bad relationship. Customers can be categorized based on their answer to the ultimate question.
The best way to gauge the efficiency of a company's growth engine is to take the percentage of customers who are promoters and subtract the percentage who are detractors. This equation is how we calculate a Net Promoter Score for a company:
How the scoring works
We scored the answers to the ultimate question on a simple zero-to-ten scale. This scale is easy for customers to understand. And the responses tend to cluster in three groups, each one characterized by different attitudes, behaviors and, therefore, economic value.
Promoters (9 or 10)
Promoters are loyal, enthusiastic fans. They sing the company’s praises to friends and colleagues. They are far more likely than others to remain customers and to increase their purchases over time. Moreover, they account for more than 80 percent of referrals in most businesses. They are, in general, pleasant for employees to deal with.
Passives (7 or 8)
We call this group "passively satisfied" because this group is satisfied—for now. Their repurchase and referral rates are as much as 50 percent lower than those of promoters. Their referrals are likely to be qualified and less enthusiastic. Most telling: if a competitor’s ad catches their eye, they may defect.
Detractors (0 to 6)
Detractors are unhappy customers. They account for more than 80 percent of negative word-of-mouth. They have high rates of churn and defection. Some may appear profitable from an accounting standpoint, but their criticisms and bad attitudes diminish a company’s reputation, discourage new customers and demotivate employees.
Net Promoter Score
Your Net Promoter Score is simply the percentage of promoters minus the percentage of detractors. It’s a number you can compile and track regularly, not only for a whole company but also for each business, product, store, or customer-service team. You can also track it for customer segments, geographic units or functional groups. It helps everyone focus on the twin goals of creating more promoters and fewer detractors. It is, quite simply, your customer balance sheet.
The Net Promoter System is much more than just the score. Net Promoter System practitioners ask customers the reasons for their ratings using an unstructured, open-ended question. This provides employees throughout the organization the opportunity to hear comments from customers every day—in their own words. These leaders build that feedback into their operating systems, using it both to address customer concerns and to fuel the innovations that generate more promoters. They use this closed loop to learn more about how they can improve their processes, people, products and pricing for the long term.
In this short video, Rob Markey explains why reliable, consistent data is central to the Net Promoter System.
How can we help you?
To discuss how our team can help your business, pleaseContact us