We often get to hear that as much hard it is to earn loyalty exactly the same level it is there to lose it. This may be hard in some other kinds of relationship but when it comes to the relation between a customer and a service? The intensity is ignited for the loss and gain to much multiple. In the world of today where everything is flying around us in form of a cloud, for us to access anytime and become aware of it. Reviews, left from customers arguably possess immense amount of power. Like a virus they spread all around within a matter of moments, thanks to the social media and other sources that can be accessed by anyone at any time.

Why you need to listen to every single customer, even the one that doesn’t seem to be important is because their recommendations and complaints determine the overall image of your service. Like it or not but 83% of the advertisement as a recommendation is done by the families and friends. Almost 100% of the total customers listen to other people when they want to choose your service. They don’t listen to any word of your advertisement, they don’t care if you have a high end advertisement and they also don’t, at times, care about the statistical analysis. Yes! They are key players in building a good audience but on the same time, people listen to other people so? Targeting these people to generate good recommendation is an easy way out and a perfect shortcut.

Multiple studies conducted in the researches told that an average customer tells 8 other people about the pleasant experience he or she had with a certain service whereas if this experience leans towards the bad side? This toll reaches to a total of 21. So if we take 1 of these 21 as yet another average customer, just imagine how much impact the overall multiplication is going to end into. Hence, arises the need to have a proper system and an algorithm that will help you give the loyalty of your customers in numbers and numbers help! Right? This system is known all over as the Net Promoter Score or simply as its acronym NPS.

So if you’ve ever heard someone asking you the performance of something or your attraction towards it. They simply put it on a scale of 1 to 10. Well, more or less NPS works exactly on this simple manner however for NPS we do replace 1 with 0. Why there is a “0” in equation is yet another interesting question. Simply because there are services flowing on the web that can’t be recommended at all! Which means frauds and rip offs. So this metric numeral ranging from 0-10 serves as a scale for you to measure the level of loyalty your customer has towards your brand or service.

Another very important reason why NPS is widely used is because of its easy implementation and rather easier integration of its data. You can calculate it by easily asking your customers “On a scale of 0 to 10, how much would you recommend this service to someone?” Thankfully, because of the scale, further categorization is just like putting blocks in their respective shape and size. Groups are divided into following.

1. Promoters, are customers who will rate you 9 or a 10. So needless to say you need to have as many promotors as possible.
2. Passives, customers who haven’t really been impressed by the service but on the same time won’t be negative enough to not recommend anyone and also not positive enough to do so either. These include scores of 7 or 8.
3. Detractors, very easy to figure out those customers you need to have as less as possible. Everyone who answers your question between a 0 and a 6 is a detractor.

Once there is a total reading of each category with the total number of people giving the reading in the first place is obtained. They are further calculated into percentages. For example, if there were 10 ratings, 6 of which were promotors then the promoter percentage will be 60%. In order to measure the NPS, you need to subtract the percentage of detractors (people who will not recommend your service) from the percentage of promotors (customers who will recommend your service). Repeatedly, it would be better that you have as less number of detractors as possible. So if you have 10 customers who rated the service, 9 of which are promotors and 1 is a detractor. You will have 90% and 10% score respectively:

Net Promoter Score = 90% – 10% = 80%

Calculating the NPS is one thing, understanding it, is the other. Clearly it is simple to understand that since NPS as a whole is a percentile figure, you can’t get it more than a 100. On the same time as much as you approach a 0 figure as much worst your service gets. But why do we say, understanding NPS is another thing? Let’s have a look. Following are the NPS’s listed for the well-known companies around the globe.

• Apple: 89
• Google: 38
• Amazon: 69
• Verizon: 7

Yes! Yes! We can easily tell the next question rising in your mind and that is having a look at those figures for Google and Verizon. To which we’re going to give a simple reason and that is, NPS might not determine if a certain service or a company sucks, but it directly depends on the industries. Obviously you need to refer to some context when you want to have a look at any statistical analysis. Since NPS is one of such statistics, it makes no exception. The NPS will vary immensely all over the variety of industries. For example, the industry of cellular phone providers might have the maximum of NPS of around 20. So if Verizon scores around 7 then this is exceptionally well. Similarly, for Software & Apps, Life Insurance, Airlines, Credit Cards. All companies will have different range of NPS.

Hence, the importance of measuring your NPS among the companies of the same sector you belong to gets on top. On the same time there is a need to measure the NPS from time to time as the reviews and recommendations are always flowing alternatively giving rise to a fluctuating final Net Promoter Score. The need to maintain and keep the NPS in a good range is important for every company because not only it’s going to keep the customers happy. It is also going to attract more on its way.

One way or another we can’t possibly look away from the prospects the NPS can develop and how immense its effect can be in multiple areas.

Guiding through the customer loyalty, the NPS can help you get the full advantage of the referral marketing. Referral marketing can be easily explained as reinforcing the method of reaching out new customers with your already engaged ones. Because a referred customer is 4 times more likely to buy if they’re referred by a friend. Whereas these new referred customers have 16% longer lifetime as customers. So if your name in the market already has the good reputation then the chances of people becoming your customers, rises exponentially.

One thing you need to keep in mind when it comes to maintaining the NPS is that it sure is important to get new customers but on the same time it is vital to keep the existing customers, satisfied. Because keeping the existing customer happy is much easier than attaining a new one and also if you retain just 5% of your customers your profits can easily boom up to 90%.

Net Promoter Score, arguably is the best way to keep a good track of how much growth in the audience you’re having. All you need to do, is to pick that scale up and start asking questions with a non-biased approach attached.