What is Your Net Promoter Score?

Referrals are a critical part of running a small business. Word-of-mouth, online reviews, and casual recommendations add value to your company. In a world where scamming and conning run rampant, humans have developed the natural inclination to seek the opinion of trusted friends, family, and reliable online sources when making a decision.

Knowing where you stand when it comes to a customer’s willingness to promote your business can help you engage new customers and seek new ways to market to your existing customer base. That’s where your Net Promoter Score becomes an invaluable metric.

What is a Net Promoter Score

Often shortened to NPS, your Net Promoter Score gives you an idea of how your customer feels about your business or product overall, instead of focusing on a singular transaction or interaction. It exists on a scale of -100 to 100, split into categories of “Detractor,” “Passive,” and “Promoter.”

The true value of the NPS is setting a benchmark that creates opportunity to problem-solve for your company in real ways.

Calculating Your Net Promoter Score

The first step in calculating your NPS is surveying your customers. These surveys are simple, generally asking your customers to rate their likelihood to recommend your company to friends and family on a scale of 0-10. Many businesses also ask why the customer gave the rating that they did, as it increases your ability to act on perceived problems that customers have with your business.

Promoters

Promoters are those who rank at a 9-10 in the survey. These are most likely to refer their friends and family to your business and are enthusiastic about your products/services. They typically constitute up to 80% of all referrals that your company receives.

Passives

This group, which ranks at a 7-8, is easily swayed by competitors, feeling no real loyalty to your company. When referring your business, they may qualify the recommendation by stating that they personally were okay with the transaction, but aren’t sure if they would patronize your business again.

Detractors

At the lowest end of the spectrum, we find the detractors, with scores from 0-6. These customers perceive some issue or roadblock in their interactions with you, are likely to not work with your company again, and have the potential to damage your business through negative reviews.

To calculate your net promoter score, simply subtract the percentage of Promoters from the percentage of Detractors. This number can be negative or positive, with larger numbers indicating higher customer satisfaction.

For example, if 15% of your customers ranked as Detractors and 50% ranked as Promoters, your overall NPS would be +35. On the flip side, if 60% of your customers ranked as Detractors and 20% ranked as Promoters, your NPS would be -40.

Using Your Results

Large, successful businesses calculate and use their NPS to continually grow their customer base and bring in new customers over time. While customer loyalty is the lifeblood of any small business, bringing in new customers is necessary for sustained growth.

Think of some of your favorite brands and what their NPS might be… Here are some of the results:

• Netflix: +68
• Starbucks: +77
• Amazon: +62
• Airbnb’s: +74
• Tesla: +96

These high scores support the success of these companies, which continue to attract new customers and retain old customers consistently throughout their years in business.

Your net promoter score may reveal surprising insights into your business. Knowing how to proceed in an effort to improve this score is the mark of a sustainable company.