What is it that let a company track its detractors and promoters and get a clear vision of the performance of the organization through the eyes of the customers? It is the Net Promoter Score and yes, you have to measure it in order to know about it. As per Bain Analysis, the companies which accomplish long-term profitable growth are actually the sustained value creators and they usually have NPS or Net Promoter Scores which are 2 times higher than any average company. Moreover, NPS leaders on an average grow twice the rate of their competitors.
Bain’s Net Promoter System – What is it based on?
If you’ve heard of Bain’s Net Promoter System, you will know that it is based on the fundamental point which says that all customers of a specific company can be divided into 3 different categories. The Promoters are loyal admirers who continuously keep buying from a company and also persuade their friends to do the same thing. Passives are satisfied with your services and products but they are not so enthusiastic and they can be wooed by the prevalent competition in the market. Detractors are the unsatisfied customers who are tired of sharing a bad relationship with your company and this is the way in which customers are categorized on the basis of their answers.
The best way to measure the efficiency of the growth of a company is by taking the percentage of customers who promote the company and then subtract that percentage from all those who are detractors. This is the equation through which we calculate the Net Promoter Score for a company.
The Net Promoter Score – How does it work?
If you think you need to calculate NPS by using a 0-10 scale, here is an example for you. If you’re a customer, you will find it pretty easy to understand it. The responses are categorized in 3 groups, each determined by their behaviors, attitudes and economic value.
Scores 9-10 – The Promoters
Promoters are the loyal fanatics and admirers and they are the ones who praise about the company in front of their colleagues and friends. They are more likely to remain your loyal customers and also refer your business to other people and help you attract new customers. They are the ones who account for more than 80% of the referral.
Scores 7-8 – The Passives
This group is called ‘passively satisfied’ as these customers are satisfied for the present moment. Their referral rates and repurchase are 50% lower than the promoters. Their referrals are even less enthusiastic and less qualified. If they get attracted by an ad from a new company, they might move on.
Scores 0-6 – The Detractors
Detractors are the unhappy customers and they account for 80% of negativity and they have huge rates of defection and churn. While some might appear profitable, some may not.
So, if you’ve been wondering about Net Promoter Score calculation, you can take into account the above mentioned scoring model.