Developed by Fred Reichheld at Bain & Company, the Net Promoter Score (NPS) is a customer loyalty metric that measures customer satisfaction using an index that ranges from -100 to 100. Customers are asked one question \u2013 if they\u2019d recommend the company to a friend \u2013 and then asked to respond using a scale from zero to 10, with zero being \u201cnot likely\u201d and 10 being \u201cextremely likely.\u201d Customers are then organized into three categories as detractors, passives or promoters, based on their responses.\nDetractors\nDetractors are those who score between zero and six \u2013 they\u2019re the most likely to have a negative perception of the brand or company and the least likely to spend money. They\u2019re also more likely customers to clog up customer service lines, lodge complaints and spread negative word-of-mouth.\n\n[ Beware the 9 warning signs of bad IT architecture and see why these 10 old-school IT principles still rule. | Sign up for CIO newsletters. ]\n\nIn its 2013 report, The Economics of Net Promoter, Temkin Group identifies detractors as having a low Customer Lifetime Value (CLV), because their behaviors are seen as \u201ceconomic penalties.\u201d They\u2019re less likely to spend more with the company and more likely to complain and spread negative reviews. As a result, they take up customer service's time and are more expensive to serve than happy customers. In addition, winning back detractors from a brand is typically more expensive than maintaining loyalty with happy customers.\nPassives\nPassives score between seven and eight on the NPS, and exhibit behavior that falls between a detractor and a promoter. Passives count towards the total number of survey respondents, which helps balance the detractors and promotors since these neutral customers move the net score closer to zero. In terms of NPS, these customers are less important than detractors or promoters because they don't inform the organization about their brand loyalty.\nPromoters\nPromoters include anyone who responds with a score of nine or 10. Promoters are more likely to buy products, stay loyal to the brand and spread positive brand awareness to others. Temkin Group found that 64 percent of promoters were more likely to forgive a business compared to 11 percent of detractors. They\u2019re also five times more likely to repurchase from the business and twice as likely as detractors to recommend to a friend.\nCompanies typically engage with promoters after the first survey question, they will often follow up to try and find out why the customer is likely to recommend the business to a friend. These responses are typically communicated back to departments in the organization that can benefit from the information. The information might be used to improve products, services, training or to restructure workflow process to keep customers happy.\nTempkin Group states that promoters have a high CLV, since these customers display behaviors that are considered \u201ceconomic benefits. They\u2019re more likely to spread positive reviews, spend more money, cost less to serve and won\u2019t cost anything to acquire, since you already have them.\nHow do you calculate NPS?\nOnce you gather the survey data, your company\u2019s NPS is determined by subtracting the percentage of detractors from the percentage of promoters, while passives count towards the total number of respondents. Surveys are typically administered via e-mail and SMS, but it\u2019s becoming increasingly popular for companies to include these surveys within their proprietary mobile apps.\nIt\u2019s easy enough to calculate your organization\u2019s NPS manually, but if you want to outsource the process, there are third-party services that will help you send out surveys and determine your score. Some popular NPS services include:\n\nSurvey Monkey\nio\nZendesk\nDelighted\nAsk Nicely\n\nWhat is a good NPS?\nA good net promoter score is technically anything above zero, which means you have more promoters than detractors. The worst score you can get is a -100, which means you do not have a single promoter and that all your customers are detractors \u2013 vice versa for a score of 100. A score of 50 or more is considered excellent. \u00a0\nLooking at B2B NPS benchmarks will give you a general reference point for where you stand against the competition and help you measure your progress. It's important to remember that average NPS scores can vary significantly by industry, and a good score in one industry might be a poor score in another. For example, the B2B software industry has an average NPS score of 27, while the IT services industry has an average NPS of 17. To put that in context, industries like HR services and architecture have an average NPS of eight and 32, respectively.\nWhy is the NPS important?\nThe result of NPS is a straightforward metric that companies can use to gauge customer loyalty and the health of the company\u2019s brand. It\u2019s just one question, but it\u2019s an important metric for helping businesses understand where they stand in the market and determine whether their effort is better spent on maintaining customers' satisfaction or if it\u2019s time to try winning back unhappy customers.\u00a0\nClosing the loop\nThe NPS has a process called \u201cclosing the loop,\u201d which is when someone can get more information from a detractor or, even better, convert them into a promoter. However, it\u2019s important to note that to \u201cclose a loop,\u201d you can\u2019t allow customers to submit feedback anonymously. That\u2019s because you\u2019ll need some way to contact them in order to attempt winning them back as a customer.\nTo get a detractor back, you\u2019ll need to reach out directly to the customer and interact with them first-hand. The Net Promoter survey will help you identify these customers and give you the opportunity to bring them back, if that\u2019s what you want. \u00a0\nCriticisms and cautions\nOne thing to consider with the NPS is there\u2019s no way to analyze responses without inherent human bias. Since responses aren\u2019t standardized, organizations need to rely on human interpretation, which means the results might be skewed based on that person\u2019s experiences.\nAnother criticism is that organizations might find detractors are unhappy but continue to stay with the company. Typically, this is because of \u201cswitching barriers,\u201das Reichheld noted in this HBR article from 2003. which is common in industries, like technology, where customers have to sign contracts and service agreements. A customer might be unhappy with their internet provider, but unable to switch because there aren\u2019t any other options available in the area. In this instance, it might be important to focus on improving the experience for detractors, rather than focusing on the promoters.