NPS is based on the fundamental perspective that every company’s customers can be divided into three categories. “Promoters” are loyal enthusiasts who keep buying from a company and urge their friends to do the same. “Passives” are satisfied but unenthusiastic customers who can be easily wooed by the competition. And “detractors” are unhappy customers trapped in a bad relationship. Customers can be categorized based on their answer to the ultimate question.
The best way to gauge the efficiency of a company’s growth engine is to take the percentage of customers who are promoters (P) and subtract the percentage who are detractors (D). This equation is how we calculate a Net Promoter Score for a company:
P – D = NPS
So what: The average score is 5 to 10%. Ebay and Amazon is over 50%. Posting the score to employees, and encouraging them to boost it, can help a business owner focus her staff on customer service. It is all about referrals and what better source than who Fortune asked to substantiate their article. “NPS is really taking off with small businesses,” says John Jantsch, who writes a popular blog called Duct Tape Marketing. “I can’t tell you how many e-mails I’m getting from NPS adopters or those looking to get started.”
The article was titled Get Customers to Sell More. This entire concept is the work of Fred Reichheld and described in his book The Ultimate Question.