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What Is Net Promoter®?

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  • Written By: Alex Newth
  • Edited By: Angela B.
  • Last Modified Date: 27 August 2016
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Net Promoter® is a business management tool and metric that measures a business’s customer relationships. This metric, unlike other complex variants, is simple and involves asking one question. The answer to this question, and the scores received, are then calculated and the business is able to retrieve its Net Promoter Score® (NPS®). While the metric ranges on a 0-to-100 scale, it is uncommon for businesses to receive 100, and 50 or above is thought of as successful. Some marketing experts disagree on whether Net Promoter® is valid and whether it proves anything about a business’s ability to prosper.

Knowing the level of a customer’s loyalty and the quality of that customer's relationship with a company is very important for the business, because keeping customers is one of the cheapest things a business can do. With Net Promoter®, a business just conducts a survey and asks the customer one simple question about whether that customer would recommend the business to a colleague or friend. The customer is asked to answer on a 0-to-10 scale, with 0 meaning not at all and 10 meaning absolutely.

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Customer responses are split into three groups. Those who answer with 9's and 10's are called promoters, those who give 7's and 8's are passives, and those who give 0's through 6's are detractors. Only the promoters and detractors are used to calculate the NPS®, but having a high number of passives may mean that a business is slipping. The percentage of overall promoters is subtracted from the percentage of detractors to get the final score, which will be between 0 and 100, with 100 meaning customers have exceedingly high loyalty for a business.

While 100 is a sought-after Net Promoter Score®, it is incredibly unlikely to get and should not be the focus of the survey effort. A score between 50 and 80 is considered above average, and a company that earns a score in this range is thought to have high growth potential. Even a score of 20 to 30 is considered good, though it shows the business has to start focusing on customer relations. Only with a score between 5 and 10 is the business considered at risk of collapsing.

Net Promoter® only focuses on one question — one that is commonly found in other customer relation metrics — some marketing experts do not consider this a valid or unique metric for businesses. Another problem is if the business is on the negative side of a social stigma, such as a cigarette company, then the metric may appear deflated. There have been many tests run by marketing experts, some of whom have found that Net Promoter® has nothing to do with business success; others have found just the opposite.

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