dispatches from the new world of work

Net Promoter Score

I urge you to read the cover story in the current Fortune Small Business: "Get Customers to Sell For You"

The article builds on the masterful work of Fred Reichheld, and features his invention, the "Net Promoter Score." There are numerous ways to measure it, but somehow one has to end up with a single number: NPS. In (very) short, the NPS is the percentage of customers who are wild about you (pretty damn happy or better) and would recommend you to others minus the percentage who are neutral or worse about you—and, hence, would not go out of their way to sing your praises to their pals.

There are a million twists—e.g., Brain Training—LearningRx, with 66 franchises, has developed an NPS for every employee—with high impact on their performance and pay.

Tom Peters posted this on 06/04/08.

Comments

Thanks for the reference Tom.... Richard

Posted by Richard Lipscombe at June 4, 2008 5:35 PM

This is a little behind - The thinking is really moving on beyound NPS (although the implementation is really only getting going - typical lag between thinking and implementing!)

There are a number of issues with NPS. These issues are more fundamental than stats questions.

1) There are measurable cultural differences in the way customers answer. A German will answer in a different way to an American. Not just in a lower or higher avg score, the question gets answered differently. Some people take the question literally (if they don't know any one to refer to they would say no). Some answer as a general question on CSAT

2) The question is would you refer. It does not measure actual action - so effectively it just measures CSAT (customer satisfaction).

Measures like this are a useful tactical/operational measure it does help you spot things you can improve.

However the thinking in this area is moving towards what action customers have ACTUALLY taken. This can be measured by Number of days to further purchase. There is no fudging this fugure. If customers buy more from you and quickly they have put their money where their mouth is and more importantly have gained real value and success from the previous purchase. With modern Business Intel systems you can track this to the interactions with various departments they may have had and link it in with tactical measures like CSAT or NPS.

Satisfied customers keep using your product/service. Successful customers buy more.

Posted by PaulH at June 5, 2008 2:36 AM