A net promoter score (NPS) is the result of a customer satisfaction survey in which customers are asked only one so-called "Ultimate" question:

• How likely are you to recommend Company or Product X to a friend or colleague?

Three Categories of Customers

Net Promoter Score is based on the fundamental perspective that every company's customers can be divided into three categories. Customers can be grouped according to their answer to the Ultimate Question based on a 0-to-10 point rating scale with "0" representing the extreme negative and "10" representing the extreme positive end.

• Promoters (9 or 10) - loyal enthusiasts who keep buying from a company and urge their friends to do the same. 
• Passives (7 or 8) - satisfied but unenthusiastic customers who can be easily wooed by the competition.
• Detractors (0 through 6) are unhappy customers trapped in a bad relationship.

The difference between the percentage of a company's promoters and detractors is the Net Promoter Score (NPS).

For example:

• If 50% of a company's customers respond with a 9 or 10
• 30% respond 0 – 6
• The company's NPS would be 20%.

A customer's response to the "recommend" question is a strong indicator of that person's economic value to the company. Aggregated across an entire customer set, the Net Promoter score is an indicator of a company's growth potential based on the strength of its customer relationships. It can also help management make the right decisions when creating the plans that will drive such growth. The NPS methodology is an excellent tool in helping to identify and create fast growth companies - and help to build market share by moving management focus away from short-term profits and toward long-term value in positive customer relationships.

NPS Measurement Process

NPS Surveys are performed periodically, or even routinely, on a population of customers for a particular product group or company. A quarterly customer survey can work really well - especially in service businesses.

The raw NPS scores are not a good comparison between companies and product lines. This is because there will be differences in customer segments, companies, and industries. They are better used as an indication of trends within one company or product group. This is especially true when they are used with a standard methodology on a similar customer base.

Measurement of Net Promoter scores are often used as an element in a larger, integrated customer loyalty program or strategy.

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