Retentions and referrals are a good measure of business success and suggest you have engaged, motivated employees.
Net promoter scores (NPS) help you to track these over time. Developed by Fred Reichheld and Satmetrix, Bain & Company (Net Promoter, NPS, and Net Promoter Score), they identified through research that the single most important question to ask any customer is whether they would recommend your company to a friend or colleague.
Using a 0 to 10 scale, they divide respondents to this question into three groups:
| Response | Customer Category |
| 9 or 10 | Promoters |
| 7 or 8 | Passives |
| 0-6 | Detractors |
NPS Calculation
NPS = Percentage of promotors less percentage of detractors
A good NPS is relative to your market and how your competitors are scoring. As a rule of thumb, Satmetrix provide this guidance:
| Company Type | NPS |
| Average | 5%-10% |
| Most efficient growth engines | 50%-80% |
Customers who actively support your brand are more likely to become repeat customers, recommend others (generally at a low acquisition cost), and be less price sensitive. In other words, promoters are sustainably profitable. Detractors, on the other hand, are more likely to shop around, complain to the company and be less profitable.
Author: Fullbrook, Heslop, Morden and Sellwood. Prosell Australia
