Net Promoter is a simple metric that measures a company’s customer relationships by asking customers whether they would recommend the business to a friend or colleague. The score ranges from 0 to 100, with 50 or more considered successful. However, some experts question its validity and uniqueness.
Net Promoter is a business management tool and metric that measures a company’s customer relationships. This metric, unlike other complex variants, is simple and involves asking a question. The answer to this question and the scores received are calculated and the company can retrieve its NPS (Net Promoter Score). While the metric ranges from 0 to 100, it is uncommon for companies to score 100 and 50 or more is considered successful. Some marketing experts disagree about whether Net Promoter is valid and whether it proves anything about a company’s ability to thrive.
Knowing a customer’s loyalty level and the quality of that customer’s relationship with a company is very important for business, because keeping customers is one of the cheapest things a company can do. With Net Promoter, a business just takes a survey and asks the customer a simple question about whether that customer would recommend the business to a colleague or friend. The customer is asked to respond on a scale of 0 to 10, with 0 meaning not at all and 10 meaning absolutely.
Customer responses are divided into three groups. Those who answer with a 9 and 10 are called promoters, those who give a 7 and 8 are passive, and those who give a 0 to 6 are detractors. Only promoters and detractors are used to calculate NPS, but having a high number of liabilities could mean a company is going downhill. 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 extremely high loyalty to a business.
While 100 is a highly sought after Net Promoter Score, it is incredibly unlikely to ever achieve and should not be the focus of the research effort. A score between 50 and 80 is considered above average, and a company scoring in this range is believed to have high growth potential. Even a score of 20-30 is considered good, although it does show that the company needs to start focusing on customer relations. Only with a score between 5 and 10 is the business considered at risk of collapse.
Net Promoter only focuses on one question – which is commonly found in other customer relationship metrics – some marketing experts do not consider this a valid or unique metric for companies. Another problem is that if the business is on the downside of a social stigma, such as a cigarette company, the metric may appear to be deflated. There have been many tests run by marketing experts, some of which have found that Net Promoter has nothing to do with business success; others found the exact opposite.
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