Customer referrals can have a significant impact on your business – and a quick, simple way to determine how likely your customers are to refer others is the Net Promoter Score (NPS).
NPS is based on the fundamental assumption that every company’s customers can be divided into three categories: Promoters, Passives, and Detractors.
Then, by asking one simple question — How likely is it that you would recommend [Company X] to a friend or colleague? — you can track these groups and get a clear measure of your company’s performance through its customers’ eyes. Customers respond on a 0-to-10 point rating scale and are categorized as follows:
- 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.
The NPS measure can run from -100% (0% promoters, 100% detractors) to 100% (100% promoters, 0% detractors), with typical measures in the 30-40% range.
To understand how good your Net Promoter Score is, it is important to put the score in context with your industry and direct competitors.
I created the question and tabulation database on Google Docs – you can access this question online here.
To calculate your score, you simply take the percentage of customers who are Promoters and subtract the percentage who are Detractors.
And here is the spreadsheet that collects the responses from the form above and calculates the Net Promoter Score. (You can access the actual spreadsheet here – and it will reflect your response to the above question.)
