Simply put, building a Net Promoter System (NPS) will give your business a sustainable, competitive advantage. This insightful management tool can be used to gauge the loyalty of a your customer relationships. It serves as a modern alternative to traditional customer satisfaction research.
To calculate your NPS score, you begin by asking your customers a simple question: How likely are you to recommend [Your Company] to a friend or colleague? (Scale 0-10). You then bucket your responses based on their score:
Promoters: 9-10
Passives: 7-8
Detractors: 0-6
Next, take the % of promoters (# promoters / total responses) and subtract the % of detractors (# detractors / total responses). The best NPS is 100%. The worst NPS is -100%.
But why does this matter? A few reasons:
Retention: detractors are 2-3 times more likely to churn. Therefore, you should treat detractors like ticking churn grenades.
Growth: promoters account for 80-90% of positive word of mouth. Therefore, you should treat promoters like referral machines which buoy your company's reputation in the marketplace.
Feedback: this is arguably the most important, and the most actionable. Detractors will provide you with feedback on WHY they don't recommend your product, service or company. You will then have a decision: take action, or don't take action. This feedback loop is critical in the evolution and improvement of your functional teams.
Alignment: the NPS framework is a great way to align EVERYONE in your company—from the intern to the CEO—around a common dialect that reinforces a "customer first" mentality.
On a tactical level, DBT recommends the following vendors to build out NPS:
Get Feedback: survey tool (integrates with Salesforce; sample survey)
Salesforce: CRM
Marketo: automated distribution of NPS email with link
Qualaroo: use for obtaining in-product NPS scores
But what does a good NPS look like? Well, it depends on your industry. Since DBT primarily works with high-growth technology companies, we can share that most of our clients are targeting a NPS score in the 50-65 range.
NPS by industry
Some companies, particularly in the mobile space—like Uber—use a modified NPS system. A ten-point scale doesn't design nicely within the limited real estate of a smartphone, so a lot of companies use a five-point scale and require a reason if you are a 1-3. For example, Uber's mandatory NPS feedback loop looks like this:
Lastly, here are several of the companies considered (by some) to be NPS leaders in their space. B2C companies tend to have significantly higher NPS than B2B customers.
