Measuring Customer Loyalty with Net Promoter Score®
By Heather Timney
How are you identifying and engaging your most satisfied customers? Many of the world’s most successful customer-centric organizations are measuring loyalty with the “Ultimate Question,” also known as Net Promoter Score® (NPS). In fact, nearly every company we work with measures this metric, along with other customer satisfaction-related key performance indicators, to achieve operational excellence.
There are many reasons why NPS Score has become such a popular metric among the business community. It’s easy to implement. It’s simple to measure. But most importantly, it’s is easy to understand. As a simplified approach to customer satisfaction research, it’s something executives and employees can easily rally behind.
Net Promoter Score Calculation
Adopted by countless customer-centric organizations to measure business performance, Net Promoter Score is based on the response to a single question, “How likely are you to recommend us to a friend or colleague?” NPS score easily determines the level of loyalty among your customer base, helping you pinpoint and address unhappy customers who have the potential to damage your brand.
Calculating your Net Promoter Score begins with a zero to 10 point rating scale. Customers who score a 7 or 8 are considered “Passives” – they are satisfied but indifferent. “Promoters” are customers who score 9 or 10. These customers are loyal enthusiasts who will continue to purchase and refer others, fostering long-term growth. ”Detractors” score between zero and 6, which signifies customers who are not satisfied and have the potential to hinder growth. Determining your NPS score is relatively simple – it’s the percentage of Promoters minus the percentage of Detractors.
What NPS Score Teaches You
The business-to-business companies that adopt NPS Score are looking for a clear-cut way to measure the health of the organization. Unfortunately, there is a misconception that NPS score is simply a metric and nothing more. However, it can actually become a culture-shaping tool when correctly executed. With that said, we believe that the best predictor of business success combines NPS and a few other metrics, such as “likely to continue to purchase.”
Ultimately, NPS score is a powerful tool that helps organizations focus on listening to customers, acting on feedback, and educating employees on the key drivers of customer satisfaction.