A large portion of my professional career is dedicated to helping businesses improve their customer relationships. When I meet with executives, I ask them how they are measuring the success of a recent project or their business overall. In most cases they respond with a variety of operational, financial and customer metrics. During our conversation my goal is to educate them about the Net Promoter Score by answer the following questions.
What is a Net Promoter Score?
Often times I find that many businesses are not familiar with the Net Promoter Score (NPS) concept designed by Fred Reichheld, Founder of Bain & Company. The Net Promoter Score is a customer-centric metric based on the principle that a business’s customers can be separated into three classifications:
How Do I Determine What Category My Customer Fall Into?
Which category a customer falls into is based on how like it is that they would recommend a business. Customers are asked to respond using a 0-to-10 rating scale.
- Promoters indicate a 9-10 rating and are loyal customers who are likely to continue to buy from that business and encourage friends and colleagues to do the same.
- Passives indicate a 7-8 rating and are satisfied customers, but they may be compelled to compare offers from competitive businesses.
- Detractors indicate a 0-6 rating and are un-satisfied customers who can hinder a business’s growth by sharing their negative experience.
How Do I Calculate My Net Promoter Score?
A Net Promoter Score can easily be calculated by using the simple formula below.
% of Promoter – % of Detractors = Net Promoter Score
Why Using Net Promoter Score Important to My Business?
Successful businesses are built from the customer up! Businesses who focus on exceeding customer expectation and improving customer satisfaction look to Net Promoter Score to determine whether their efforts are paying off. These businesses achieve high referral rates and growing numbers of repeat customers, resulting in continued growth and increased revenue. Its power lies in its simplicity as NPS translates feedback from customers into a single numeric score that is easy to understand and, more importantly, combined with customer verbatim drives immediate improvement actions.
Do You Have An Example Of An NPS Success Story?
After utilizing NPS for two years, Sleep Number improved their Net Promoter Score by 500%! They successfully transforming detractors into brand advocates/promoters. The CEO at that time, was quoted in the Q4 2010 Earnings Call as saying, “NPS Increased 500% during the past two years, and we are now firmly in the range of top performing companies and we believe we can advance even further to join the elite.”
How Do I Get Started?
The Rendement Group is available to ensure your Net Promoter Score efforts are successful. Let us help you evaluate and determine your Net Promoter Score Approach by starting with an initial, free-of-charge consultation.
Please take a few minutes to read these additional resources.
- Transform An Unhappy Customer Into Your Strongest Promoter: Why NPS Works!
- Process Improvement For Small to Midsize Companies: Don’t Wait, Act Now!
How are you measuring the success of your business? Are you using the Net Promoter Score metric? Tell us in the comments below!