person rating a website on a tablet
The net promoter score can help you improve customer service and business performance. — Getty Images/jakkapan21

As a business owner, it’s important to understand how your customers perceive your brand. One way to gauge your customers’ perception and opinion of your company is by interacting with them on social media. By measuring your net promoter score (NPS), you’ll gain better access to this information. Here’s everything you need to know about an NPS, and why regularly tracking it matters.

What is a net promoter score?

The net promoter score (NPS) was first developed in 2003 by Bain and Company; and it’s now used by millions of businesses to track how they’re perceived by their customers. Your NPS is the gold standard customer experience metric, especially for measuring your customers’ loyalty.

[Read: Customer Loyalty: What’s Love Got to Do With It? A Lot]

How to calculate your net promoter score

NPS scores are measured with a single question survey — “How likely is it that you would recommend [Organization A/Product B/Service C] to a friend or colleague?” — and reported with a number from -100 to +100 (the higher the score, the better). Respondents are asked to rate your company between 0 (not at all likely) and 10 (extremely likely). Based on their rating, customers are classified into 3 categories: promoters, passives and detractors.

  • Promoters. Promoters are respondents who gave a score of 9 or 10. They are repeat customers who love the company’s products or services and are enthusiastic supporters who recommend the company to others.
  • Passives. Passives are respondents who gave a score of 7 or 8. They’re somewhat satisfied with your company, product, or service, but could easily switch to a competitor given the opportunity. They’re not enthusiastic enough to promote the company, product or service, but they probably won’t spread any negative opinions either.
  • Detractors. Detractors are respondents who gave a score of 0 to 6. They’re not particularly thrilled with the company, product, or service and likely won’t purchase from the company again. Detractors have the potential to damage a company’s reputation by spreading their negative opinion through word of mouth.

The NPS is determined by subtracting the percentage of detractors from the percentage of promoters. If a company has more detractors than promoters, their score will be negative, and vice versa. This system provides a simple, straightforward metric that can be shared with front-line employees to convert detractors into promoters.

Your NPS is the gold standard customer experience metric, especially for measuring your customers' loyalty.

How your net promoter score can improve your business

Your NPS is one of the most powerful, adaptable and underrated metrics for assessing your company’s daily performance. No matter your score, here are some ways your NPS can help you improve your overall customer service performance.

  • It aligns your team. Giving your team a clear goal and removing all barriers that may prohibit your team from reaching that goal is a great way to help push your company into hyper-growth. One way to achieve that growth is by making your NPS a key metric for your customer-facing teams to reach, so every customer enjoys a positive experience with your company.
  • It measures word-of-mouth traffic and consumer loyalty. One of the most beneficial features of the Net Promoter Score is the ability to measure the word-of-mouth responses to your company. Your overall marketing strategy should focus on creating a steady word-of-mouth pipeline. You can use your NPS to gauge your word-of-mouth performance and customer loyalty daily, including the likelihood of your current customers referring your business to new customers.
  • Identifies areas of improvement. When you create a new product or launch a new service, collecting customer feedback is essential. When you track NPS, you can see the side effects of product and service updates and troubleshoot changes for your product in real time. If there’s a product issue that causes them to give you and your business a bad rating, you’ll be able to see it in your NPS ranking.

Your NPS isn’t the only metric you should use to measure how well your company is performing. However, it’s a helpful tool for checking in with your customers and improving your customer service experience and business as a whole.

[Read: 3 Expert Strategies to Encourage Positive Customer Reviews]

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