Understanding and Using the Net Promoter Score (NPS) by Dave Will

The Net Promoter Score is one of the most common metrics used in organizations with reported numbers showing that the majority of Fortune 1000 companies use it to measure their customers satisfaction and loyalty.

Whether you’re the CEO of a Fortune 1000, an Entrepreneur with dozens of customers or an Association with thousands of members, the NPS, although not perfect, is a good metric to measure your relationship with your customers periodically.

Here’s all you need to know to understand how it’s measured, and I’m going to keep it super simple.

The customer can answer from 0-10.

  • “Promoters” answer a 9 or 10.
  • “Passives” answer 7 or 8.
  • “Detractors” answer 0 – 6.

The NPS is determined by subtracting the percentage of customers that are Detractors from the percentage of customers that are Promoters. Just ignore the Passives. (They can’t make a darn decision.) The potential score ranges from -100 to +100.

For example, if 80% of your customers answer a 9 or 10, 10% answer a 7 or 8, and 10% answer 0-6, then your NPS = 80-10 = 70.

Here’s a really cool table showing average NPS by industry.

There should be an open ended feedback option to the NPS allowing your organization to record the Voice of the Customer (VOC). That’s another blog post altogether some day.

Of course, there is some criticism of NPS, which is easy to understand. One number can’t possibly tell us how we can improve our customer loyalty.

It’s very difficult to get much information out of one question. But, it’s a simple and easy metric which is good for tracking purposes. By implementing this kind of question quarterly, semi-annually or annually, you can start to get a feel for how your company is trending in the eyes of the customer, as long as you’re capturing more information as well.

This is the “sales” part of this post… THAT’S WHY WE CAPTURE NPS IN PROPFUEL ALONG WITH LOTS OF OTHER QUESTIONS!!!! We strongly encourage organizations to ask their stakeholders questions frequently. Just not too many at once.

If you would like to see how PropFuel can help you capture your Net Promoter Score and other feedback on a regular basis, set up a time to talk to Dave here.

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