Back in 2006, business expert Fred Reichheld came out with a book called The Ultimate Question: Driving Good Profits and True Growth. His concept was an immediate sensation, and it’s changed how major companies all over the world think about survey results.
I’ll explain the idea for anyone who’s not familiar with it. Did you ever notice that almost all customer satisfaction surveys have one question in common: “How likely are you to recommend [company] to a friend or colleague?” Well, there’s a good reason. The answers to that question help produce a figure called the Net Promoter Score. It’s a number that many business experts feel is a reliable predictor of growth.
A Net Promoter Score is easy to determine. Anyone who answers the “How likely are you …” question with a 9 or 10 is a “promoter.” These customers are highly likely to hire you again, refer your company to their friends, and/or write positive reviews online. They add equity to a brand and help create growth for the businesses they support.
Anyone who responds with a 7 or 8 is a “passive” and is neither good nor bad for a company’s reputation.
Finally, there are “detractors,” people who answer the question with a 6 or below.
To learn your Net Promoter Score (NPS), subtract the percentage of detractors from the percentage of promoters in a customer satisfaction survey. Passives count toward the total number of respondents, but don’t affect the score.
The possible range for an NPS goes from -100 (everyone is a detractor) to +100 (everyone is a promoter).
Ten years after Reichheld’s book was published, the idea is still used by thousands of companies from small family businesses to The Home Depot and Marvin Windows and Doors.
I believe the idea is a useful metric and wanted to give it a shout-out here for continuing to stay relevant.