I’ve spent all of my career in marketing and one of the most
interesting customer feedback mechanisms I’ve come across has been the Net
Promoter Score.
Net Promoter is a customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, and Satmetrix.
It was introduced by Reichheld in his 2003 Harvard Business Review article "The One Number You Need to Grow” (which he later expanded into a book “The Ultimate Question”, 2006 HBS Press)
Companies obtain their Net Promoter Score by asking customers a single question - The Ultimate Question - on a 0 to 10 rating scale: "How likely is it that you would recommend our company to a friend or colleague?"
Based on their responses, customers can be categorized into one of three groups:
Net Promoter is a customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, and Satmetrix.
It was introduced by Reichheld in his 2003 Harvard Business Review article "The One Number You Need to Grow” (which he later expanded into a book “The Ultimate Question”, 2006 HBS Press)
Companies obtain their Net Promoter Score by asking customers a single question - The Ultimate Question - on a 0 to 10 rating scale: "How likely is it that you would recommend our company to a friend or colleague?"
Based on their responses, customers can be categorized into one of three groups:
- Promoters
(9-10 rating),
- Passives
(7-8 rating), and
- Detractors
(0-6 rating).
The percentage of Detractors is then subtracted from the
percentage of Promoters to obtain a Net Promoter score. A score of 75% or above
is considered quite high. Companies are encouraged to follow this question with
an open-ended request for elaboration.
Proponents of the Net Promoter approach claim the score can be used to motivate an organisation to become more focused on improving products and services for customers and to build ‘good profit’.
The potential downside of NPS, or any survey or feedback programme, is that if handled badly it can have a negative impact on customer loyalty. We’ve all had experience of being interrupted during a family meal or our favourite TV programme by a phone call from someone soliciting our feedback.
But there are ways in which surveying can enhance customer loyalty and Reichheld gives some examples:
Proponents of the Net Promoter approach claim the score can be used to motivate an organisation to become more focused on improving products and services for customers and to build ‘good profit’.
The potential downside of NPS, or any survey or feedback programme, is that if handled badly it can have a negative impact on customer loyalty. We’ve all had experience of being interrupted during a family meal or our favourite TV programme by a phone call from someone soliciting our feedback.
But there are ways in which surveying can enhance customer loyalty and Reichheld gives some examples:
- At
Harley-Davidson, for example, customers are treated like family members –
they get phone calls only from recent Harley retirees (hired back
part-time) who know the company and its products well and who are charged
with listening closely to customers. Not coincidentally, these retirees
generate deeper customer insights while also reinforcing the Harley
culture and brand.
- At
Southwest Airlines, president Colleen Barrett insisted that any employees
who wanted feedback from a customer write a personal letter requesting
that information and explaining what they intend to do with it. They must
also write a thank-you to customers who respond, describing the actions
that will be taken as a result of their feedback.
How many of you have examples along the lines of
Harley-Davidson or Southwest? What about the other side of the coin? As always
it is interesting to share and learn from others.
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