The logic behind the Net Promoter Score is quite easy to understand. If a company has more promoters than dectractors the NPS is positive, and the higher the NPS the more loyal your customer base is.
But the real power behind the Net Promoter Score lies in tracking it over time and aligning it with your company goals. By making NPS transparent across the organisation and actively engaging employees to produce more promoters than detractors organisations really boost their growth. This happens in a number of ways:
Promoters generally have longer, more profitable relationships with a company.
Promoters increase their purchases more rapidly than detractors, because they tend to consolidate their purchases with their favorite supplier. They are more interested in new offerings and brand extensions than detractors are.
Promoters are often less price sensitive than other customers, particularly detractors.
Promoters typically require less in sales, marketing and advertising costs than other customers. They generally have fewer complaints and account for fewer credit losses.
Promoters generate 80 percent to 90 percent of referrals. Conversely, detractors account for most negative word of mouth.