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How to calculate your Net Promoter Score

Posted by Nicola Evans on Feb 10, 2015 9:57:00 PM
Nicola Evans

You may already know the single most important question you can ask your customers is, “On a scale of zero to ten, how likely is it that you would recommend [your business] to a friend or colleague?”

 Add a rating scale of “0 = Not at all likely to 10 = Extremely likely” and boom, you have a survey question ready to calculate your Net Promoter Score. Now you can see if your customers’ actions will create sustainable business growth.

Once you have asked this question and received at least over 100 responses, run a chart for the results of your survey. Note how many scores of 9 and 10 you received – these are you angels. They are your customers so hopelessly smitten with what your business, they will tell between 4 and 10 more people about you.

 Now add up all the scores from 0 to 6. These are your ‘demons’ or promoters. They are customers who have used your products or services but are now actively advising their social network not to use you. Ignore those who scored between numbers of 7 and 8 as they will neither create positive or negative word of mouth exposure for you.

 Now subtract the percentage of customers generating negative word of mouth (your demons) from the percentage of customers generating positive word of mouth (your angels). This is your company’s Net Promoter Score. What score did you get?

 By the way, the average company has a Net Promoter Score of 5 – 10. Great companies enjoy scores of 50 – 70 or more. If you love your iPad, iPod or MacBook Air, you’ll be interested to know Apple’s most recent NPS score is 83.

 Think how many friends you’ve told about Apple products plus how many have now got one themselves. Do you understand why NPS is so powerful?

 Net Promoter Scores are strongly correlated with (organic) company growth. Consider, Apple using data from over 10 years ago when Steve Jobs had only just returned to Apple at this point. The iMac was still in creation, the iPod, iPhone, iPad were not invented, it had an NPS score of just 66%. In 2015 their score is now 83. This shows you the power of your customer sentiment.  

 The great thing is NPS can be applied to almost every industry and company you can think of, however large or small. So, armed with this knowledge, what are you going to do about it?

 Here are some killer questions to provoke thinking and innovation:

 What would be the impact on profitability if you increased your Net Promoter Score by 5?

  1. What additional benefits do you think you might gain by increasing the score by 5?
  2. Why wouldn’t you want to use this metric as one of your Key Performance Indicators (KPI)?
  3. What might such a KPI reveal about the quality of your sales force?
  4. How might such a KPI be used to incentivise your sales force?
  5. How might such a KPI help you to improve your value propositions?
  6. How might such a KPI help you plan to increased growth, profitability, and free cash?

 For further reading, take a look at our blog about the ‘Killer’ follow-up question.

 If you are struggling to create an NPS survey, calculate your NPS or interpret the results, please contact us!

 

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Topics: Customer Engagement, Survey Strategies

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