Wouldn’t it be great if you could diagnose the health of your business with just one question? According to the proponents of the Net Promoter System, you can! The Net Promoter System is a customer loyalty metric developed by Fred Reichheld, Bain & Company, and Satmetrix. It was first introduced as the Net Promoter Score by Reichheld in his 2003 Harvard Business Review article “The One Number You Need to Grow”.
Since then, it has been widely adopted by enterprises like Amazon, American Express, Apple, Cisco, Dell, Ebay, Federal Express among others. As a simplified KPI of customer satisfaction – based on customer willingness to recommend a company’s product or service to friends – management can get a quick and accurate picture of corporate health.
What Does the Net Promoter System (NPS) Show?
Extensive research has shown that for most industries, NPS consistently predicted customer behavior in areas such as:
- Customer retention
- Repeat purchases or transactions
- Other indicators of customer loyalty, profit and interest
Studies also show that companies with long-term profitable growth have Net Promoter Scores two times higher than other businesses. Additionally, companies with high scores have an average growth rate, twice that of their competitors.
How Does NPS Work?
Using a 0-10 scale, NPS segments customers into 3 groups:
- Detractor (0-6)
- Passives (7-8)
- Promoters (9-10)
Customers are asked the question “How likely is it that you would recommend Company X [or Product X] to a friend or colleague?” After collecting the feedback, you tally the total number of customers that are Promoters and Detractors. You then subtract the percentage of Detractors from the percentage of Promoters with the difference equaling your Net Promoter Score.
Getting the Info You Need While Being Respectful of Your Customers’ Time
By using this short question (above) which is respectful of customers’ time, companies are able to quickly gauge customer sentiment. Companies that want to get more actionable information can ask the customers why they responded the way they did. This open-ended question generally gives more precise insight into which areas require improvement or other changes. This is done when using transactional NPS – using this method, the customer is asked a follow-up question regarding whether any particular transaction or interaction might have impacted their answer to the first question. While still mindful of the customers’ time, the additional question provides more details to guide any corporate improvements or changes. Online feedback and NPS has become an integral part of corporate success – integrating NPS with the online environment is essential for driving growth. At Kampyle our online feedback solutions incorporate NPS, combining our years of experience collecting and analyzing customer feedback with this popular customer satisfaction metric.