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NET PROMOTER SCORE

April 24, 2018

 


How likely are you to recommend our company to a friend or colleague?
 

LOYALTY

Like most people around the globe everyone has a dream for business owners they want their business to grow and thrive. The secret lies behind one word “LOYALTY”

Loyal customers and clients are the secret ingredient for any business to success that’s why most of the companies put their focus on how to get customer loyalty. Loyal customers are those who literally live and breath your product or the provided service you offer them. Furthermore, they are the one who spread the word to others about what you do.

But how to know who is loyal?

To identify loyal customer, we need a system for that not only to measure loyalty but also knows and answers the question (WHY?)

Why they are loyal?

The Net Promoter Score NPS:

Representing the net promoter score or NPS. Net promoter system is designed to do just that and for years startups and fortune 500 companies had been using such score to rise their profit.
 

The NPS categorizes customers into 3 categories.

The loyal one and they are called the PROMOTERS.

The neutral people or the crucial group in the middle, people who are likely to be attracted by competitors and they are called the PASSIVES.

Business crushers or customers who simply hate your brand and they are called DETRACTORS.

 

How to Calculate the NPS?

This score predicts future growth and churn by subtracting promoters from detractors to get the net promoter score.

The main focus of NPS is depends only on one main question

How likely are you to recommend our company to a friend or a colleague?

Based on clients and customers rating from zero to ten, we classify people into one of the following groups.

 

  • Promoters (users who rate 9-10): Best described as your brand ambassadors and are very enthusiastic about your company.

  • Passives (users who rate 7-8): Best described as people who feel neutral about your company and most likely won’t tarnish your brand’s reputation.

  • Detractors (users who rate 0-6): Best described as dissatisfied customers who may damage your brand through negative word of mouth.

 

After classifying customers, we calculate the company’s NPS using proportion of promotors and detractors. Note that, passives are not used to calculate the score.

How to calculate NPS:

Firm or Company NPS = (% Promoters – % Detractors) x 100.

For example, if you conducted the survey and 75% rated 9 or 10, and 15% rate 1-6, your score would be (75% – 15%) x 100 = 60. An NPS of 60 is a very good score as the majority of your customers are promoters.
 

How to Determine If a NPS result Is Good or bad.

Generally, any NPS over 30 is considered good, over 50 is great, and over 70 is world-class. A negative Net Promoter Score is considered bad.


 

 Before focusing on how to be on the bright side of the score, you should consider your 4P’s Product, Place, Promotion and Price. Because every industry have its own circumstances and there is no clear or unique way to determine what is the best score.

 

Net Promoter Score Benchmark Study. 2016

 

In conclusion NPS is one of useful indicators that can shows you whether your company is going on the right way or not as it classifies customers based on their loyalty.

 

The Management Centre and its team of expert have used this system over time and the result has been profound. Be sure to contact us at info@mcmed.eu if you need our expertise in this regards.

 

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