Net Promoter Score (NPS)*® -
This short introduction is written by Niels Kjellerup 10.07.09 Ashgrove.
The Net Promoter Score-method has quickly gained popularity as a powerful business tool, which in a simple, but effective way measures a company’s result and at the same time indicates what the future growth prospects are based on “the customer’s willingness to recommend their experience to others”. Happy customers equates to a potential good future for the company.
How to measure NPS
NPS has recently swept aside all other customer satisfaction surveys by asking this simple question:” On a scale from 0-10 how likely is it that you will recommend us to your colleagues, friends and family?”
I. Customers answering with a 6 or lower are identified as detractors with a negative view of the service experience.
II. Customers answering 9 or 10 are viewed as promoters &
III. Customers answering 7 or 8 are viewed as loyal, but neutral as promoters; this group is important because they will either sink down to become detractors or with the best service experience will rise to become promoters.
The Net Promoter Score (NPS) is found by subtracting the number of detractors from the group of promoters.
The Score not only shows the current state of Customer Service, but as important can be used to predict future growth and profit for the company.
NPS has documented thanks to The London School of Economics research project and the creator of NPS Frederick Reichheld from Bain & Co, that there is a direct correlation between the Net Promotor Score and the company’s future growth potential.
It is no wonder that many Fortune 500 companies have now embraced the methodology and uses NPS - GE, Honeywell, Allianz, Charles Swab, Ebay, Citigroup, Philips, American Express and Danish Lego.
Concurrently NPS has turned the spotlight on existing customer satisfaction measurements – a method which can’t be used to predict the growth potential of a company. Reichheld quotes satisfaction research showing that 60-80% of ex-customers giving ‘a satisfied or very satisfied’ rating just days before they quit and become ex-customers.
NPS is very popular amongst Senior Executives, perhaps due to its extreme simple form, and at the same time controversial amongst survey experts.
General Electric as an example uses NPS to improve all customer related processes and is planning to use the Net Promotor Score as the basis for executive remuneration & bonuses.
"In the almost 20 years that I have worked at GE, NPS is the most powerful tool we have ever deployed. The reason is that it is so actionable." -- Dan Henson, GE CMO.
Proctor and Gamble employs NPS to take the pulse on its brands.
Finally we have a measurement tool which first and foremost highlights the Customer Experience of a company’s service delivery but furthermore is a trustworthy indicator of the company’s growth and potential profitability.
A Key Value Indicator which is understood by both Customer Service and Senior Management.
To best place to get started is the book “The Ultimate Question” by Fred Reichheld ISBN 978-1-59139-783-0 Harvard Business Publishing Corp.
*Net Promotor Score® is a registered trademark of Satmetrix, Bains&Co & F Reichheld
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