Earlier this week we talked about which factors people use to gauge their success as a small business owner. Today we’re going to look at a great to measure the success of the business itself. It’s called the Net Promoter Score (NPS).
If you’ve not heard of it before, the NPS of a business is measured with one simple question posed to its customers: “how likely would you be to recommend this business to a friend or colleague?” The respondents’ answers fall on a scale of 1 to 10, and are then grouped into 3 categories – Promoters (9-10), Passives (7-8), and Detractors (6 or below). To make it simple, you disregard the Passives, and then subtract the percentage of Detractors from the percentage of Promoters, and that number is your NPS. Sometimes expressed as a percentage, sometimes as a score.
What counts as a good score is totally dependent on your industry. In the some industries, like retail, the scores can be quite high (80s-90s). In other, like healthcare, even a low score can be competitive as long as it’s higher than other scores in the industry. Once you know the averages for your industry, you can judge your success against you peers. Once you’ve established your own NPS, you can survey your customers periodically and judge your score against yourself to see how you’re improving (or not).
So how do you go about getting the answers you need to determine your NPS? One easy, inexpensive, and effective way is to do a survey. You can email it out to your list, or you can have it pop up on our website if you are more technically inclined. Alex, our own intrepid analyst here at Webs, posted recently about surveying your customers. He suggests Survey Monkey as a good place to start.
More of a visual learner? Check out an infographic about Net Promoter Score we posted earlier this year.
After you run your survey and crunch the numbers, come back and let us know what you came up with!