November 1, 2011

What’s Net Promoter Score and Why Should You Care?

The idea of net promoter score was first introduced to the business world in a 2003 Harvard Business Review article. The score is a customer loyalty metric developed by Fred Reichheld, Bain & Company and Satmetric and is heralded as one of the simplest loyalty measures. The goal of net promoter score is to provide a snapshot of a company’s performance through its customers’ eyes.

The Calculation

To begin, customers are asked one question: How likely is it that you would recommend Help Scout to a friend or colleague? Customers answer this question on a 0-to-10 rating scale (10 is “extremely likely” and 0 is “not at all likely”). Based on this number, customers are then categorized as Promoters, Passives or Detractors.

Satmetrics defines each of these categories:

  • Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
  • Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
  • Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

Your company’s net promoter score is the percentage of customers who are Promoters minus the percentage who are Detractors.

Generally, a net promoter score that is greater than zero is good, and a score of greater than 50 is excellent.

Make the Most of Your Results

The model is simple: we all want more Promoters than Detractors. Bear in mind that this score is just a snapshot, not a comprehensive measure. If your score is negative, then this is a red flag that tips you off that customers are dissatisfied. If your score is highly positive—great, keep up the good work! Either way, once you have these results you should act on several fronts:

  • Conduct follow-up research. Get a deeper understanding of the causes of customer dissatisfaction or, alternately, customer joy!
  • Motivate your staff. Make your employees aware of your NPS to encourage them to improve your products and services. Also, how can you up your game to make Promoters out of Passives?
  • Focus on the good. This is can be an opportunity to recognize and expand what customers see as your best practices.
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Help Scout is simple help desk software that enables teams to deliver personalized customer service at scale.