Measuring your Net Promoter Score

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 (P) and subtract the percentage who are detractors (D). This equation is how we calculate a Net Promoter Score for a company:

P – D = NPS

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.

via The Ultimate Question: Measuring your Net Promoter Score.

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