Net Promoter Score is the One Metric that Counts

The Ultimate Question – Will You Recommend Us to Others

Net Promoter Score
The Net Promoter Score is the one metric that matters. Getty Images

If you don't know what a Net Promoter Score is now is the time to pay attention. Because it asks the ultimate question - will you recommend us to others? After all what other questions matter after that. The Net Promoter Score is the one metric that matters.

A Net Promoter (NPS) is based on the perspective that every company's customers can be divided into three categories: Promoters, Passives, and Detractors.

By asking one simple question you can track these groups and get a clear measure of your company's performance through its customers' eyes.

And in the pace of today's marketing environment, fueled by social media, this is an important metric to track.

Customers respond on a 0-to-10 point rating scale and are categorized as follows:

  • Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
  • Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
  • Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

You calculate your company's Net Promoter Score (NPS), by taking the percentage of customers who are Promoters and subtract the percentage who are Detractors.

How to Take Action

Grouping customers into these three groups accurately predicts customer behavior.

The business goal is to turn everyone into Promoters. It is imperative therefore to increase the percentage of Promoters and decrease the percentage of Detractors.

Promoters generate good profits and fuel true growth. They become, in effect, an extension of a company's marketing department. You cannot achieve long-term sustained growth on the basis of bad profits.

CAHPS Versus Qualitative

We have done reporting on HCAHPS data that looks to measure the experience patients/clients have with their hospital, nursing home or home health agency. While the questions provide a start in assessing where problems lie, they do not do nearly enough to identify root cause analysis. Using a combination of analysis tools to identify root causes enables employees to address the real and relevant loyalty drivers for their customers. A good mix of quantitative and comment analysis increases the likelihood that you will make the optimal customer-focused decisions. So you must follow the quantitative CAHPS data with qualitative information.

The payoff from a successful Net Promoter program is the ability to make the right strategic decisions and foster innovations that improve your market position.

Key metrics that an organization can look at to assess the results of a NPS include:

  • Retention
  • Margins
  • Cost
  • Word-of-Mouth: Between 80 and 90% of positive referrals come from Promoters. Detractors, meanwhile, are responsible for 80 to 90% of the negative word-of-mouth.

    Two-thirds of the economy is influenced by word of mouth. One word of mouth is equal to 600 advertising exposures. Word of mouth is the most potent marketing a business has going. Just ask the auto industry. In a 20-year span they increased their television advertising by 1,378 percent but sales only increased 17 percent.

    Consider this quote from Andy Sernovitz, CEO, Word of Mouth Marketing Association: “In many cases, WOM isn't actually "marketing" at all. It's great customer service that earns customer respect.”

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