Do the Math

A simple equation can help boost your sales.
Magazine Contributor
2 min read

This story appears in the March 2006 issue of Entrepreneur. Subscribe »

Take the percentage of your customers who would recommend your company to a friend, then subtract the percentage who would not. The result is your net promoter score. In The Ultimate Question (Harvard Business School Press, $24.95), Fred Reichheld says this number is vital for businesses, and he shows how to calculate it--and raise it.

U.S. companies' average net promoter score falls short of 10 percent, Reichheld says. Some companies score much higher, however. To calculate yours, ask customers "How likely is it you would recommend this company to a friend?" soon after each sale. Have them rate you on a zero-to-10 scale. Consider nines and 10s promoters, and anyone answering below five a detractor. Then try different approaches to raising your score until you find what works.

Survival Story
Every company that lasts for a long time must learn to survive in changing environments. In Dealing With Darwin (Portfolio, $25.95), Geoffrey A. Moore continues the bestselling series begun with 1991's Crossing the Chasm with this discourse on adapting an existing business to new obstacles. The key, Moore says, is to redirect resources from activities that don't affect profits to those that do. Moore frames his discussion with a case study of tech titan Cisco Systems, but his insights apply to companies at almost every stage.

Mark Henricks is Entrepreneur's "Staff Smarts" columnist.
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