Have you ever have a friend recommend a particular business or provider for a product or service you were looking for? Most of us have, and the chances are that when we’ve had our own positive experiences, we have also made recommendations to others. As a business, if you can provide great customer services, your customers are much more likely to refer your business to others and act as natural promoters. So, how can you make sure your customers are likely to refer your business?
What is the Net Promoter Score (NPS)?
The Net Promoter Score, developed by Bain & Co, was created to explore how customer perception translated into loyalty, referrals and other behaviour. It asks the question, “What is the likelihood that you will recommend Company X to a friend or colleague?” with customers being given a choice on a scale of 0 – 10.
Categorising your customers
Within the scale, customers are then grouped into 3 groups: Detractors (Score 0-6), Passives (Score 7-8) and Promoters (Score 9-10), where Detractors are customers who are unhappy and have had a negative experience. They are likely to share negative experiences with other potential customers and may affect your company’s reputation and discourage potential customers.
Passives are customers who have had a reasonable experience and have referral rates of around 50% lower than Promoters. They may share good experiences with others but not with as much enthusiasm, and not as often. Promoters are not just loyal customers, but brand fans. These are the customers actively telling others about your company and their experiences with you. They make over 80% of referrals to your business, and are likely to be repeat customers consistently over time.
Calculating your Net Promoter Score
Your NPS is the percentage of promoters you have, minus the percentage of detractors:
NPS = % Promoters – % Detractors
For example, if Promoters make up 30% of your customers, and Detractors make up 10% of your customers, then your NPS would be 20. A score of over 0 is rated as “good”, over 50 is rated as “excellent” and 70+ is considered to be “world class”.
Why is your NPS useful?
The NPS is a good metric for looking at your business’ progress over time, and measuring improvement in your customer services. So it’s extremely helpful to consider whether your customers are likely to refer your business. If you have a low NPS or are looking for improvement, ActionCOACH clients in the UK have an average NPS of 72.
Find out how to increase your Promoters, as referrals as a result, by getting in touch today on 07703 107070.
