The Ultimate Question book imageIn his groundbreaking book, The Ultimate Question, Fred Reichheld introduced the Net Promoter Score (NPS).  It’s based on one simple question: “Would you recommend our company to a colleague or friend?” The NPS gives businesses a loyalty metric to conduct customer sentiment analysis, while tracking their promoters and detractors.

  • 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.

How to measure your NPS

To calculate your company’s Net Promoter Score, take the percentage of customers who are Promoters and subtract the percentage who are Detractors. Here’s a graphic that helps illustrate the simple calculation.

How to calculate your score
From http://www.netpromoter.com/np/calculate.jsp

How does your industry stack up?

By aggregating data from 3.2 million customer-contributors for Bazaarvoice clients across 18 different industries, we’re able to establish insightful benchmarks for each.

NPS rankings

5 Industries with highest Net Promoter Scores plus loyal and influential client base:

  • Health/Beauty
  • Jewelry
  • Food/Drug
  • Sporting Goods
  • Apparel/Accessories

Generally these industries tend to have more loyal followers and probably less complaints than, say, most service industries. However, all companies have an opportunity to use their NPS feedback, improve their customer experience, and gain a competitive advantage over their rivals.

For example, take health care. The Cancer Treatment Centers of America uses NPS as a trigger to action and has experienced great results. The CTCA has standard monthly reports for all staff and management, and even the Board of Directors is updated quarterly. In order to improve their NPS, they contact patients and caregivers to identify their needs and build stronger relationships, as well as incorporate “Patient Loyalty” topics in regular staff meetings.

In the telecommunication industry, Verizon leads the pack with 41% NPS, as they take their customer feedback seriously and are all about building customer loyalty. Since 2008, “Verizon Wireless has heard feedback from over two million customers, with employees throughout the organization involved in more than 750,000 follow up calls.” They have made it their business to create promoters and at a conference, they stated, “Management has demonstrated a willingness to take clear action based on customer feedback. That motivates employees and delights customers.” Verizon has figured it out and shared several keys to NPS success, including, the right executive sponsor, dedicated program leadership, and cultural DNA.

In the FinServ category, USAA stands out. They come in at #1 in customer loyalty for 2010 US Net Promoter rankings, banking category. With 81% NPS, USAA has been collecting reviews, asking and answering questions, and requesting customer stories since 2009. They’ve also worked with us to launch a brand new Financial Advice community.  So far, they’ve been getting about 25 questions a day.

Just Ask Cott
"Just ask Scott" is a hit with USAA customers.

How to use NPS data to improve your business

  • Collect your NPS and comments. Be prepared for criticism.
  • Reach out to your most dissatisfied and vocal detractors. Think: “What would make this customer give us another chance?”  When you have your answer, do it!
  • Reach out to your most loyal and happy promoters. Give them opportunities to share their favorite products with their social networks. Some options include:
    • Feature them as a “top contributor” on your website
    • Ask them if they’d like to write a guest piece for your blog
    • Make sure they’re able to share their experiences with your products and brand through Facebook

Why should I do anything about the NPS?

  • Prevent Negative WOM
  • Lower Cost to Serve
  • Retain customers
  • Create better profit margins.
  • Create competitive advantage.

How do you use the NPS to create customer fanatics?

Other Resources and Benchmarks:

The Ultimate Question

Use Net Promote Scores to Identify Solid Influencers

Net Promoter Score Website

5 Responses to “Use this word of mouth metric to create customer fanatics”

  1. Barry Victor

    I agree Rachel. Net Promoter is an excellent metric, especially for e-commerce. Have you tried http://www.Recommendi.com ? It’s a free web app that allows you to do Net Promoter surveying for free.

  2. Did you come from the future? Do you bring us “good tidings”??

  3. A certain amount of ambiguity follows around NPS. I hear the term tossed around, but it doesn’t seem like we always know what to make of it… and in some cases how to calculate it. This provides some great context. Thanks!

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