Net Promoter Score® is a metric used by companies to measure Customer Loyalty. Additionally, it also appraises the health of a company and its Growth potential.
It was first developed by Frederick Reichheld in his seminal paper, ‘The One Number You Need to Grow’. Now, it is used widely by companies to gauge Brand Loyalty.
Net Promoter Score® is based on Recommendation. And, recommendation drives Growth. Consequently, a high Net Promoter Score® is an indicator of high growth.
Numr Research, a market research company in India, calculates Net Promoter Score® based on one simple question.
“How likely are you to recommend us (product/service) to a friend or a colleague?”
Here, 0 stands for the least likely and 10 the most.
Subsequently, based on the score they give, customers are divided into 3 categories-
They are customer who give a score of 9 or 10.
Promoters are ardent fans of your Brand. Also, they are your most loyal customers. Additionally, they drive up recommendations through positive word of mouth. Therefore, they are organic Growth and Expansion.
Passives are the customer who provide a score of 7 or 8.
These are semi-satisfied customers. Mostly, they do not care for your brand. They are neither fans nor haters. Furthermore, they are quite susceptible to offers from your competitors.
Detractors refers to the customers who respond with a score of 6 or less.
These are extremely dissatisfied, angry customers with a high possibility of Churning. Additionally, they damage your brand via negative word of mouth. Listening to and satisfying detractors should be the top priority of all companies.
Now, the Net Promoter Score® is calculated by subtracting the percentage of Detractors from Promoters.
Furthermore, the Net Promoter Score can range from –100 to 100 conceptually. It could be –100 if all customers are Detractors. Conversely, it could be 100 if all customers are Promoters.
In conclusion, Numr Research, a market research company in India asserts that the end goal of any NPS® exercise should be converting Detractors and Passives into Promoters.