We’ve recently seen a dramatic increase in the number of our clients who are using Net Promoter Score (NPS) as a Key Performance Indicator (KPI) and management tool. For those of you who are new to NPS, here is a primer:
Over the last few years Net Promoter Score (NPS) has gained prominence as a core measure of how customers really feel about a product/solution/service. It is based on the answer to a simple question – how likely would you be to recommend <xyz>? To be willing to make a recommendation, not only do you need to be satisfied with it, you have to be willing to put your credibility on the line in promoting it to friends and colleagues.
NPS scores correlate strongly with revenue growth. Customers who give a vendor high marks on willingness to recommend; stay with their current provider, buy more from them, and encourage others to use them. Customers who give a low NPS are much more likely to look elsewhere and dissuade others from buying.
To calculate an NPS, customers are asked to rate their willingness to recommend on a scale of 1 to 10. Responses are then segmented into 3 groups:
The NPS is then simply the % Promoters – % Detractors. The highest possible NPS is 100% (everyone is a Promoter) and lowest NPS is -100% (everyone is a Detractor).
For a high level NPS benchmark, a 2013 survey by The Tempkin Group of 269 companies found NPS’s to range from a high of 66% to a low of -42%.
At Topline we have incorporated NPS into our methodology, and in fact, have advanced this management tool into what we call Strategic NPS. If you are interested in understanding NPS further and how it can help your business, please contact us.