What if you could hire all of your customers to help you promote your company? It’s the question Frederick F. Reichheld, a partner at Bain & Company, outlined in a 2003 Harvard Business Review article, which launched the concept of the Net Promoter Score (NPS). Reichheld calls this score, “the one number you need to grow.”
Your NPS is a simple and proven metric that can help you measure customer experience. It can predict your business growth. Here’s why you need to pay attention to this score.
Customers prefer it
Thanks to social media and word-of-mouth, consumers prefer to make purchase decisions by going online and finding out what others think. They’ll ask family and friends for recommendations. At least 83 percent of those surveyed say they trust recommendations from friends and family more than any other form of advertising
Your happy customers are telling friends and family, and that’s awesome. It’s the flip side of this coin which needs your attention. Unfortunately, customers are more likely to share a bad experience, and they’ll tell nearly three times as many people.
It’s not just your job to make customers happy. You must understand what’s displeasing them, and the only way to do this is to gather as much customer feedback as possible.
Creating a survey to determine your Net Promoter Score is easy. You’ve already seen it countless times.
“On a scale of 0 to 10, how likely are you to recommend us to a friend?”
- Those who give you scores of 0–6 are known as detractors.
- Those who give you scores of 7–8 are known as passives.
- Those who give you scores of 9–10 are known as promoters.
Using the data to generate the NPS score is simple.
First, discard the passives. They’re indifferent right now. The promoters have identified themselves as loyal and enthusiastic customers who are marketing for you by telling friends and family.
But there are also the detractors, those customers who didn’t care for the experience they had with you. Keep in mind, they’ve been known to tell three times as many people they don’t like you as the promoters who will tell people they love you.
Subtract the percentage of detractor responses from the percentage of promoter responses, and you’ve got your Net Promoter score. It’ll range from -100 to 100.
What your NPS says about you
Your NPS is an effective way to determine customer loyalty. A high score suggests you should be focused on referral marketing because you have a large number of engaged customers who are willing to recommend your product or service. According to Nielsen research, prospects are four times more likely to become customers when they are referred by a friend.
And there’s room for improvement. How can you decrease them? YOU also can impact the number of passives. They don’t count in your score, but they can make a difference if you encourage them to become promoters.
One area offers the greatest impact. You can affect your NPS score by reaching out to your detractors – those customers who gave you a 0–6 NPS score. Let’s say the average promoter tells 10 friends or family members about you. Statistically, a detractor might tell up to 30 friends of family members to stay away from you. Promoters are very important. But winning over just a single detractor might be more valuable.