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Home > Why Net Promoter? > Know
Know
The Net Promoter Score and System
Know the score.
The Net Promoter Score, or NPS®, is based on the fundamental perspective that every company’s customers
can be divided into three categories: Promoters, Passives, and Detractors.
By asking one simple question — How likely is it that you would recommend [your company] to a friend or colleague?
— you can track these groups and get a clear measure of your company’s performance through your customers’
eyes. Customers respond on a 0-to-10 point rating scale and are categorized as follows:
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Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative
word-of-mouth.
To calculate your company’s NPS, take the percentage of customers who are Promoters and subtract the percentage
who are Detractors.
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More than a numbers game.
Net Promoter programs are not traditional customer satisfaction programs, and simply measuring
your NPS does not lead to success. Companies must follow an associated discipline to actually
drive improvements in customer loyalty and enable profitable growth.
They must have leadership commitment, and the right software and business processes in place to
deliver real-time information to employees, so they can act on customer feedback and achieve
results.
The ultimate test for any customer-relationship metric is whether it helps the organization tune its
growth engine to operate at peak efficiency. Does it help employees clarify and simplify the job of
delighting customers? Does it help them identify and engage their best customers? Does it allow
them to compare their performance to the best from week to week and month to month? The notion
of Promoters, Passives, and Detractors does all this, and helps companies turn into Net Promoter
stars.
It’s a super model.
The most successful companies using Net Promoter build out a complete operational model with
NPS as its centerpiece. Real breakthroughs in performance are achieved only when companies
move from a research model to an operational model embedded in their company culture.
In their book, Answering the Ultimate Question, Richard Owen and Dr. Laura Brooks of Satmetrix
describe the Net Promoter Operating Model that captures the elements necessary for a successful
customer-focused program. It provides a best practice framework for how companies collect,
evaluate, and act on customer feedback to optimize financial benefits.
Satmetrix consulting experts can show you how to apply the Net Promoter operating model to your
business, engage your team, and drive growth. Satmetrix also offers a wealth of options to expand
and deepen your Net Promoter knowledge and success.
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Interested in learning a little bit more about how Satmetrix solutions can help you understand your customer?
Click here, let’s start a conversation
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About NPS
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History of Net Promoter
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Measuring your Net Promoter Score
http://www.netpromotersystem.com/about/measuring-your-net-promoter-score.aspx
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 leaders on average grow at more than twice the rate of competitors.
NPS 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:
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More than a score
The score is at the heart of the Net Promoter® system, but you can’t take action if you don’t know why a customer is
or is not "likely to recommend." You should always follow up the Ultimate Question with an open-ended question:
"Why?"
The answers can help transform your organization. To learn how, check out the Closed loop, Learning and Action
processes of the Net Promoter system.
While easy to grasp, NPS metric represents a radical change in the way companies manage customer relationships
and organize for growth. Rather than relying on notoriously ineffective customer satisfaction surveys, companies can
use NPS to measure customer relationships as rigorously as they now measure profits. What's more, NPS finally
enables CEOs to hold employees accountable for treating customers right. It clarifies the link between the quality of a
company's customer relationships and its growth prospects.
How do companies stack up on this measurement? The average firm sputters along at an NPS efficiency of only 5
percent to 10 percent. In other words, promoters barely outnumber detractors. Many firms—and some entire
industries—have negative Net Promoter Scores, which means that they are creating more detractors than promoters
day in and day out. These abysmal Net Promoter Scores explain why so many companies can't deliver profitable,
sustainable growth, no matter how aggressively they spend to acquire new business. Companies with the most
efficient growth engines—companies such as Amazon, Rackspace, TD Bank, Harley-Davidson, Charles Schwab,
Zappos, Costco, Vanguard, and Dell—operate at NPS efficiency ratings of 50 percent to 80 percent. So even they
have room for improvement.
In concept, it's just that simple. But obviously, a lot of hard work is needed to both ask the question in a manner that
provides reliable, timely, and actionable data—and, of course, to learn how to improve your Net Promoter Score.
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Learn about the Net Promoter® system and its processes
Read the latest from the NPS Loyalty Blog
View Net Promoter® system videos
Discover who is already using Net Promoter®
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Learn more
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Buy from Amazon
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Buy from B&N
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Download intro
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Watch the preview
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Sign up for our email newsletter, Loyalty Insights, for a step-by-step guide to installing a Net
Promoter® system at your company
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Airlines turn to NPS to cut customer turbulence
The most toxic kind of corporate “waste”
Delighting bank customers one phone at a time
Telstra’s Net Promoter system
The growing popularity of employee NPS
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http://www.surveymonkey.com/mp/net-promoter-score/
The Net Promoter ® Score
"On a scale of zero to 10, how likely are you to refer to a friend or colleague?"
If you've seen this question before, you've encountered the Net Promoter Score (NPS)—a methodology that gauges
customer sentiment. Pioneered by Fred Reichheld, author of The Ultimate Question, the NPS predicts the likelihood
of a customer repurchasing from you or referring your company to a friend.
Calculating the Net Promoter Score:
Reichheld developed the NPS methodology, which is based on asking customers a single question that is predictive
of both repurchase and referral: "On a scale of zero to 10, how likely are you to refer to a friend or colleague?"
The answers customers provide are classified as follows:
 0 - 6 = "Detractors"
 7 - 8 = "Passives"
 9 - 10 = "Promoters"
The NPS is calculated by subtracting the percentage of respondents that are labeled "Detractors" from the
percentage of respondents that are labeled "Promoters":
% of Promoters - % of Detractors = NPS
Net Promoter Score can range anywhere from -100 to 100.
To calculate your Net Promoter Score with the SurveyMonkey template, follow these simple steps:
 Download your survey responses into an Excel spreadsheet.
 Within your spreadsheet, identify your respondents as "Detractors", "Passives" and "Promoters" by adding up the
total responses from each classification.
 Generate the percentage total of each group by taking the group total and dividing it by the total survey responses.
 Subtract the percentage total of "Detractors" from the percentage total of "Promoters" and this is your NPS.
Example:
If you received 100 responses to your survey:
10 responses were in the 0 - 6 range (Detractors)
20 responses were in the 7 - 8 range (Passives)
70 responses were in the 9 - 10 range (Promoters
Calculating the percentages for each group gives you 10%, 20% and 70% respectively.
Subtract 10% (Detractors) from 70% (Promoters) which equals 60%. Since a Net Promoter Score is always shown as
just an integer, and not a percentage, your NPS is simply 60.
Net Promoter Score Advantages:
The greatest advantage to NPS is its simplicity. It's easy to calculate and with the Survey Monkey Net Promoter
Score Template, you can start surveying your customer base in minutes.
Additionally, the NPS makes customer experience quantifiable in the executive suite. Management can see how well
departments are performing with one simple metric. This introduces a common language that is easy to understand
by everyone: is this customer a Promoter or a Detractor?
Net Promoter Score Disadvantages:
The NPS is not without its criticism. Many academics find it ill advised for a business to operate just off of one number
and would recommend that a full customer satisfaction survey might generate more actionable data.
The NPS is simply an outcome metric, and it does not tell management what needs to fixed. A positive net promoter
score will not conclusively lead to an uptick in revenue, while corrective actions derived from a traditional survey will
have an impact on the bottom line.
However, for a quick, easy method by which to determine whether your customers are more likely to promote or
detract from your company, use the NPS.
Try the Net Promoter Score template now!
Net Promoter Score is a trademark of Satmetrix Systems, Inc., F . Reichheld, and Bain & Company.
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