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What Is a Net Promoter Score, And Should You Implement It in Your Business?


Authored by Kayla Brehm
Published on December 10, 2014

Here at Help.com, we're all about providing better customer service. One industry-standard and simple way to measure the effectiveness of your customer service organization -- and your business as a whole -- is a Net Promoter Score.

In this post, we'll run through what a Net Promoter Score is, why it's such a popular metric, how to calculate your score, and which companies have the best (and worst!) Net Promoter Scores.

If you haven't implemented Net Promoter Score yet, or don't know what it is or why it's useful, this article will be a perfect introduction to the concept!

What is a Net Promoter Score?

A net promoter score is calculated based on the answer to one question you ask your customers:

How likely are you, on a scale of 0-10, to recommend our business to a friend or colleague?

Based on the response, your customers are classified as promoters, passives, or detractors. Promoters are the people who gave you a 9 or 10 on this scale--they are the most likely to recommend your product or service to others.

Passives score a 7 or 8 -- they're not unhappy with your business, but they're not likely to recommend you, either.

And finally, detractors score a 6 or lower on this scale. They're the customers most likely to leave, or to say negative things about your company to their colleagues (or worse, publicly!)

Net Promoter Score: Customers are classified into promoters, passives, and detractors.

Net Promoter Scores are popular because they're simple and easy to use. They generally have a high uptake with customers, particularly after a customer service interaction. They're particularly effective when you ask a customer why they gave you a certain score after asking them for their score:

You rated us a 6. Care to tell us more about why you did so? How can we improve?

How Do You Calculate a Net Promoter Score?

Your Net Promoter Score can range from -100 (everyone is a detractor) to +100 (everyone is a promoter.) It's calculated by taking the percentage of all your promoters and subtracting the percentage of all your detractors.

Here's how to calculate a Net Promoter Score of a hypothetical business with 100 customers who have responded to the survey:

 

First, compile all responses, discarding the passives. Then, get the percentage of promoters, and subtract the percentage of detractors. The score that's left is your Net Promoter Score.

In this case, our hypothetical business has a NPS of 14 -- better than average, but not great.

What is a Good Net Promoter Score?

Good Net Promoter scores vary by industry, but a score of 50 to 80 is typically considered "good." Average companies have Net Promoter Scores of 5 to 10 -- they have almost as many unhappy customers as happy customers, and thus struggle to grow!

Some industries, particularly those with significant lock-in, may have lower Net Promoter Scores as a whole. For instance, Comcast and Time Warner Cable, two of the largest cable providers, have negative Net Promoter Scores -- more unhappy customers than happy customers. The industry as a whole doesn't have much competition, though, so even those who are considered detractors will stick around because they often don't have a choice.

In industries where the market is more efficient, and customers can easily switch vendors, Net Promoter Scores become a critical benchmark for measuring growth. For instance, if you're competing with Amazon, your Net Promoter Score better be similar to Amazon's, at 64, or you'll struggle to gain customers against them.

 

Companies with the Best Net Promoter Scores

It probably won't surprise you to hear that companies like Amazon, Apple, and Costco, with great service and solid return policies, sit at the top of many Net Promoter Score benchmarks. But do you know which company scored the highest amongst the banking industry benchmarks?

The answer may be a company you're unfamiliar with: USAA. USAA provides services to military families and veterans, and touts in their commercials that over 90% of their existing customers plan to stay for life. It just goes to show -- there's always an opportunity, even in an established industry, to raise the bar with better customer service!

Here are some other companies with great Net Promoter Scores:

Retail Stores Costco 82
Financial Services USAA 81
Technology Apple 72
Online Services Amazon 64
Travel Southwest 62

Source: Satmetrix

Should You Use the Net Promoter Score System for Your Company?

Knowing your Net Promoter Score as a business will give you a good benchmark on whether your business will grow by referrals. Combined with the critical "Why..." question, asking customers for a Net Promoter Score after they interact with you will quickly give you insight into which customers had a poor customer service experience, and how you can improve their support experience -- which will put you ahead of the curve in your industry.

The key, as with many business metrics, is not just knowing your NPS "number", however. It's actively following up with those who are detractors and helping resolve their issues to their satisfaction -- as well as following up with passives and promoters to see how you can help them refer more customers to your organization.

Without tailored action, your NPS is just a number. So when you do decide to implement a Net Promoter Score, make sure you put the infrastructure in place on your end to follow up with your customers and make their lives better -- thus ensuring your Net Promoter Score number will continue to rise!

   




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