NPS is a metric that requires just one question to be answered – ‘How likely on a scale of 0-10 are you to recommend company/product X to a colleague or a friend?’ The answer to this simple question can be profound. It separates customers of a product or a service into three groups who are divided by one thing – the difference between the expectations they had of the product/service before using it and the experience they had after using it.
When expectations are missed you create a detractor – or someone who will make negative recommendations. When expectations are met you create what Reichheld calls a passive – someone who does not feel strongly enough to recommend either positively or negatively. When expectations are exceeded you create a promoter – or somebody who will make positive recommendations.
The Net Promoter Score is calculated by subtracting the percentage of customers who are detractors from the percentage who are promoters. Passives are ignored because what you are creating is your recommendability Balance Sheet – the bottom line of your ability to create advocates. It’s common sense then to deduce that a company that has significantly more promoters than detractors will perform better than one with the reverse position.