What is a Net Promoter Score and Why Should I Care?
The Net Promoter Score, or NPS, is a straightforward metric that holds companies and their staff accountable for how they handle customers. The concept was first popularized through Reichheld's book, The Ultimate Question, and thanks to its simplicity, has been embraced by customer-centric companies worldwide as the standard for measuring and improving customer loyalty.
NPS is based on the core idea that every company's customers can be divided into three categories: Promoters, Passives, and Detractors. By asking one simple question — “How likely is it that you would recommend [Company X] to a friend or colleague?” — companies can identify and track these groups to get a pure measure of the company's performance through its customers' eyes.
Customers respond on a 0-to-10 point rating scale and are categorized as follows:
- Promoters (score 9-10) - loyal enthusiasts who will keep buying and refer others
- Passives (score 7-8) are satisfied but unenthusiastic customers
- Detractors (score 0-6) are unhappy customers who can damage the brand through negative word-of-mouth
Calculation is simple, take the percentage of customers who are Promoters and subtract the percentage who are Detractors.
The country’s most popular brands can achieve scores up to 80%. For example, Apple scores 71%, while Trader Joes scores 73%. But the average firm scores a disappointing 5 to 10%. The scores are also analyzed by industry. The telecommunications industry as a whole scores a woeful 4%, with some firms gaining scores of -41%. (Yes, having detractors outnumber promoters will result in a negative score.)
M5 adopted NPS as our customer loyalty model in 2008. We are committed to creating an exceptional service experience. Great service is what our customers, define it to be. We strive to go beyond satisfied to create fans that will refer us to other businesses. We proactively contact our entire client base twice a year to obtain their feedback and clients can change their score at any time.
M5 is leading the industry by taking the concept one step further and making our current NPS score publically available at http://trust.shoretelsky.com/. That’s right, our clients, prospects and even competitors can check out our score without any log in credentials. We do this for two reasons. First, we feel that this is an important metric that our clients and associates should know. We are proud of our score and eager to share. Second, making this information publically available sends a message to our entire team that providing an experience that clients love is the heart of what we do. If we disappoint our customers, there is nowhere to hide.
We recommend NPS as a great loyalty gage for any business and encourage you to ask your customers how likely they are to refer you to a friend. The results may be exciting or frightening, but either way, you’ll have a good benchmark and an excellent way to measure progress toward the goal of turning your customers into raving fans.