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Will Michaelson

Will Michaelson Sales Associate

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Net Promoter: The Ultimate Question and the One Number You Need To Grow

If you are asking whether customers are satisfied with your service—you’re asking the wrong question.  If you are measuring and trying to increase your customer satisfaction—you’re measuring the wrong thing. Eighty percent of satisfied customers will still shop around to your competitors.  So don’t grow your number of satisfied customers. Grow your fan base.

Measuring your fan base is quite easy, and is determined by asking one simple question: “How likely is it that you would recommend this company to a friend or colleague?” This one question, when measured properly, offers a more accurate way of gauging customers’ real loyalty to a company, instead of mere satisfaction in the services it provides. Because really, what is the ultimate act of loyalty, but to place one’s reputation on the line and recommend a company to someone else?

Now that you’ve got the question, ask it of all your customers, every time they do business with you. Determine a simple, unambiguous scale so that managers can make customer loyalty a strategic goal.  Below is a scale developed by Fred Reichheld, author of numerous books on customer loyalty:

“On a scale of 1-10, how likely is it that you would recommend this company to a friend or colleague?

Extremely Likely

 

 

 

 

 

 

Not at all Likely

10

9

8

7

6

5

4

3

2

1

(Promoters)

(Passively Satisfied)

(Detractors)

                   


According to Reichheld, “clustering customers into three categories—promoters, passively satisfied, and detractors (as noted above)—[provides] the simplest, most intuitive and best predictor of customer behavior; it also [makes] sense to frontline managers, who can relate to the goal of increasing the number of net promoters and reducing the number of detractors more readily than increasing the mean of their satisfaction index by one standard deviation.”

The real number you want to grow, however, is your Net Promoter Index. This is calculated by taking the percentage of your “Promoters”, and subtracting the number of “Detractors.”  For example, let’s say you surveyed 100 people. Forty answered the question above with a 9 or 10, thirty answered with a 7 or 8, and 30 answered with 1 through 6.  Here’s how you calculate your Net Promoter Index:

Promoters

40

Detractors

-30

Net Promoter Index

10%

 


Don’t be surprised if your score is lower than you expect. The median score for companies is just 16%.  The point is that now you have a baseline to improve your score. Start thinking of ways to foster fans of your organization, and implement with your staff and through your organization. Don’t forget to promote your organization, so your fans know how to promote you too.

Jeremy Alicandri
Good point but I think the ultimate act of loyalty is a repeat purchase. I consider referrals "brand ambassadorship."
Jim Bell
Interesting thought on asking that question to everyone. I'm not sure about doing that. I would rather have them do an online review that will reach possibly more people than just their circle of friends. I know that referrals are great to have and we do great with them, but I think I would rather have a customer do a review. Just my 2 cents.
Amy Taggart
I actually worked for the company that developed the Net Promoter Score with Fred Reichheld, Satmetrix. The digital world is so tiny! One of the major benefits of NPS is that you can ask a simple question of your customers to uncover your customer champions and the accounts that need more attention. When you've got someone who is a "promoter", they're the person to ask for that online review, Jim. Having your customers spontaneously give you a positive review online is fantastic, but sometimes you need to give them a push...and you have to know who they are to do that. The NPS is also a good way to give your team a high-level overview of how they're doing with customers -- it's also something to track and work on.
Paul Long
Good morning, everyone. Amy, I recently was certified as an NPS associate by the good folks at Satmetrix. Jeremy, although repeat purchases can be an indicator of loyalty, customers who purchase from you repeatedly may also feel trapped in doing so, and therefore they would/could be considered detractors, which ultimately hurt your brand and your profitable growth opportunities. NPS has proven that the value of a "promoter" is significantly higher than the value of a "detractor", or of a "passive". When you take into consideration that promoters buy more, cross shop, refer their friends, and give great feedback, their value can be as much as 40% higher than an average customer. It's important to know who those customers are. It's also important to know who your detractors are, and close the loop with these customers. Can you imagine the impact of being able to turn a detractor into a promoter? Jim, Satmetrix has developed a tool to ENGAGE your promoters to deploy an online review after taking the survey. It's really cool.
Paul Long
One more thing: Fred Reichheld would argue that the ultimately act of loyalty is NOT a repeat purchase, or a Net Promoter Score of a 9 or 10. In fact, Fred likes to cite the retired CEO of Harley Davidson, James L. Ziemer, who measures Harley's brand loyalty not by a score or revenue. They measure it by how many people have their logo tatooed to a body part! Well, for the purposes of most companies, however, the true act of loyalty is when someone will place their reputation on the line and recommend an organization to a friend, family or colleague.

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