Eight years ago, author and business strategist Fred Reichheld published The Ultimate Question: Driving Good Profits and True Growth. In it, he detailed the meaning of "bad profits," or a company that is making money while its reputation goes down the tubes.
It happens for a number of reasons: Misleading prices, poor customer service, or bad products. Customers feel marginalized, misled, and mistreated. As Reichheld says, "bad profits are about extracting value from customers, not creating value."
When it happens, customers can do two things: say nothing, or say something negative about the company. Only a lucky few brands actually get recommended by their customers.
Reichheld, working for consulting firm Bain & Company, helped create a metric to quantify this phenomenon. It's the Net Promoter Score, or NPS. It measures exactly how people feel about a business by asking one question: "How likely is it that you would recommend this company to a friend or colleague?"
Here at PCMag we do regular surveys for our Readers' Choice Awards and Business Choice Awards. In every questionnaire, we ask our readers that very question about the companies behind the products they use. Now, just in time for your holiday shopping, we've finished up the surveys and can share with you the tech companies most recommended by fellow readers, based on their NPS numbers.
Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.
How to Calculate a Net Promoter Score
The way the NPS is calculated is pretty simple. When asked "How likely is it that you would recommend this company to a friend or colleague?" respondents click anywhere on a scale of 0 ("Not at All Likely") to 10 ("Extremely Likely"). They are then categorized as Promoter, Passive, or Detractor:
Promoters (score 9 or 10): Loyal enthusiasts who will keep buying and refer others. They are extremely likely to recommend getting more products or services from the vendor.
Passives (score 7 or 8): Satisfied but unenthusiastic customers who are vulnerable to competitive offerings. They probably don't care about the company one way or the other.
Detractors (score 0 to 6): Unhappy customers who can damage the brand and impede growth through negative word of mouth. These people are unlikely to recommend the company.
Passives get ignored. The Net Promoter Score comes from subtracting the percentage of Detractors from the percentage of Promoters. So:
If there are a large number of detractors, the number can even go negativeyes, a score of less than zero. That's bad news.
We acknowledge that there are plenty of critics of NPS. Some say the info gleaned from an NPS is not actionable. It's not like a company can actually "use" its NPS number to make things better for itself.
But it goes back to the "bad profits" conversation. A company that sees an increase in its NPS over time can infer it's doing something right. Those with high numbersthe kind represented in the following pagesare already doing plenty right.