Measuring Value is hugely important yet is a famously difficult thing to do. Value is subjective and means different things to different people.
Net Promoter Score (NPS) is the world’s leading metric for measuring customer satisfaction and loyalty. It goes beyond measuring how satisfied a customer is with a company. The NPS system is designed to gauge the customer’s willingness to recommend your brand to others.
How to calculate the Net Promoter Score.
The most common way to calculate the NPS is to ask customers to rate (on a scale of 1-10) how likely it is that they would recommend your brand to a friend or colleague.
NPS is based on the principle that every organisation’s customer can be divided into three categories:
Promoters represent a score of 9-10 out of 10. These customers are loyal enthusiasts who will keep buying, refer to others and fuel growth.
Passives represent a score of 7-8 out of 10. These individuals are satisfied but unenthusiastic customers who are vulnerable to your competitors' offerings.
Detractors represent a score ranging from 0-6 out of 10. They are generally unhappy customers who can damage your brand, impeding your growth through negative word-of-mouth.
To calculate your company’s NPS, we take the percentage of customers who are Promoters and subtract the percentage who are Detractors. Passives are not accounted for in this calculation as their thoughts are recognised to be neutral, therefore, they may not engage in positive or negative word-of-mouth.
Calculating the NPS is the most effective way to manage customer experience and it allows businesses to capture consumer perception towards their brand.
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