Marketing October 14, 2014 Last updated September 18th, 2018 1,414 Reads share

Net Promoter Score: What It Is, And Why You Need It

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Net Promoter Score, also known as NPS, is a relatively new marketing tool that savvy companies are adding to their strategic marketing metrics. It works on a simple enough premise, that essentially all your customers can be classified into one of three categories.

Let’s take a quick look at each:

  1. Promoters – these are the type of customers every business wants. They love you, they love your products/services, and they go out of their way to recommend you to friends and associates. Have enough of these, and you’ll be able to retire early!
  2. Passives – these are the sort of “ho-hum” folks. They like what you’re doing, but, quite frankly, wouldn’t go out of their way to buy it, if something comparable was handier and cheaper. They’re really up for grabs for you, and your competitors.
  3. Detractors – ouch! These are not happy customers. For a variety of reasons, they don’t want to have anything to do with what you sell, or your company in general. Something happened here that turned them off.

The Formula

This is called the Net Promoter Score, and it’s easy to calculate. Essentially companies take the percentage of customers who are Promoters, and subtract the percentage who are Detractors. Just leave the Passives out completely. The resulting score (on a 0 to 10 basis) is how you rank with your customers.

Obviously you want to be in the upper echelon of your NPS – certainly well above 50%. Anything below that and you should be very, very concerned. By the same token, even the best of companies find it hard to reach 80% and above. It’s a tough marketplace out there, and it’s getting tougher every day! It will help you focus on what you need to do to stay ahead of the curve.

How NPS Works

Net Promoter Scores are basically simple to conduct. The theory being, the simpler the questionnaire, the more engaged those being questioned will be. Nobody likes long, drawn out questionnaires! Getting straight to the heart of it, most NPS surveys are based on 1-3 questions. That’s it. Of course, the main question is always would they “recommend” your company and its products and services to others. That’s the information you need to draw a bead on not only to sell, but what you need to do to survive!

How Net Promoter Scores Are Determined

This is one area where versatility leads to success. You can use whichever method (or combination of methods) will do the best job of getting the information you need. Questionnaires can be conducted via email, over the phone, or right at the sales counter when the customer is checking out. The Net Promoter Score modus operandi can also be used in a sort of follow up sales call, (“Were you happy with your purchase? The service you received?). That’s like getting a double bang for your buck.

How Net Promoter Score Can Affect Your Business … Today And Tomorrow

NPS is a quick, uncomplicated, and inexpensive way to gauge how your company is doing in the marketplace, not only today, but as a guidance tool for the future. It’s a lot more information than just what you’re doing right, or not so right. That’s important, sure, and it lets you fix the problem (or take even bigger advantage of the situation if all is going right), right now. You need that type of marketing analysis on almost a daily basis.

However, your Net Promoter Score is equally important as a marketing laser pointed into the future. Over a period of time you’ll build up vital information on what products you need to develop, which ones you can deep-six, what marketing strategies are working hard for you, and which ones aren’t performing up to par. All this allows you to allocate resources, money, product development, and employees to achieve maximum efficiency, and maximum profit – not to mention staying a few jumps ahead of your competition.

Does it really work? You could ask Apple, Dell, Vanguard, QANTAS, Avis, GE, Lockheed, and hundreds of other well-know firms and their answer would be a resounding, yes! It fact, in many cases it’s actually transformed the way they built, marketed, and sold products/services. If it has achieved this for them, then it can for you too.

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Rahul Sharma

Rahul Sharma

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