Net Promoter Score
Too Easy?
In Peter Fader’s interview with Fred Reichheld and Rob Markey, the authors of The Ultimate Question 2.0, we learn that one simple question can gauge if a company is meeting it’s objectives with their customers: “Would you recommend a product or service to your family, friends, or colleagues”? The Net Promoter Score or NPS, which is derived from this question, employs three factors for measuring this metric:
• Promoters: people who love your company or product and will recommend to others
• Passives: people who are ok with your company or product but aren’t over enthusiastic
• Detractors: do not like the company or product; will not do business with you
To measure NPS, you simply subtract the detractors from the promoters. Companies can take their NPS score and try to grow it to achieve a long, happy relationship with current customers and hopefully attract many more new customers. This method may seem “too easy” but it one of the most important metrics a company can use to measure success.
Successful Employment of NPS
Although determining the NPS is very simple, how do companies best employ the results? The most common thought would be to concentrate on your detractors and create ways to gain their business and loyalty. But one successful company, Enterprise Rent-A-Car, the number one car rental company in North America for seven consecutive years (J.D, Power and Assoc., 2010), does exactly the opposite. They strive to serve their promoters. Andy Taylor, Enterprise CEO in 2003 said, “By concentrating solely on those most enthusiastic about their rental experience, the company could focus on a key driver of profitable growth: customers who not only return to rent again but also recommend Enterprise to their friends” (Reichheld, 2003). One way they do this is through CRM. Their most loyal customers are routinely rewarded with discounts and free rental upgrades.
Another example is the one employed by Royal Philips
In Peter Fader’s interview with Fred Reichheld and Rob Markey, the authors of The Ultimate Question 2.0, we learn that one simple question can gauge if a company is meeting it’s objectives with their customers: “Would you recommend a product or service to your family, friends, or colleagues”? The Net Promoter Score or NPS, which is derived from this question, employs three factors for measuring this metric:
• Promoters: people who love your company or product and will recommend to others
• Passives: people who are ok with your company or product but aren’t over enthusiastic
• Detractors: do not like the company or product; will not do business with you
To measure NPS, you simply subtract the detractors from the promoters. Companies can take their NPS score and try to grow it to achieve a long, happy relationship with current customers and hopefully attract many more new customers. This method may seem “too easy” but it one of the most important metrics a company can use to measure success.
Successful Employment of NPS
Although determining the NPS is very simple, how do companies best employ the results? The most common thought would be to concentrate on your detractors and create ways to gain their business and loyalty. But one successful company, Enterprise Rent-A-Car, the number one car rental company in North America for seven consecutive years (J.D, Power and Assoc., 2010), does exactly the opposite. They strive to serve their promoters. Andy Taylor, Enterprise CEO in 2003 said, “By concentrating solely on those most enthusiastic about their rental experience, the company could focus on a key driver of profitable growth: customers who not only return to rent again but also recommend Enterprise to their friends” (Reichheld, 2003). One way they do this is through CRM. Their most loyal customers are routinely rewarded with discounts and free rental upgrades.
Another example is the one employed by Royal Philips
References: Khan, S. (2011, May 10). How Philips Uses Net Promoter Scores To Understand Customers. Retrieved from Harvard Business Review: http://blogs.hbr.org/cs/2011/05 Organ, M. (2012, July 23). The Evolution of Net Promoter Scores: Advocate Mobilization Scores. Retrieved from Influitive: http://influitive.com/2012/07/23/test-post Reichheld, F. (2003, December). The One Number You Need to Grow. Retrieved from Harvard Business Review: http://hbr.org/2003/12 Unknown (2010, November 16). Rental Car Satisfaction Study. Retrieved from J.D. Power and Associates: http://www.jdpower.com/content/press-release/85QkLyq/rental-car- satisfaction-study.htm