"Our Take" - Net Promoter Score

(Past Editions by: Date, Title, Topic)

 
About "Our Take" 
"Our Take" is a collection of daily vignettes covering a wide range of CRM topics. It's an attempt to add our own spin to the world of CRM. We will use the column to share our perspectives, opinions, epiphanies, web nuggets, or quite frankly anything that moves us. Get ready to expect the unexpected. And, don't be shy about sharing your thoughts.
 
 
11/29/05 - The Acid Test
Last week, I had a dialog with an old colleague discussing customer loyalty and the conversation turned to measurement and Net Promoter scores. My colleague has been using the "Net Promoter" scoring system to measure loyalty for some of his clients.
 
In brief, the Net Promoter score is derived from customer responses to, what I refer to as, the acid test question: "How likely is it that you would recommend our company to a friend?" Based on responses on a 0 - 10 scale, subtract the percentage of scores in the 0 - 6 range from the scores in the 9 - 10 range (7 - 8 scores are considered passive) to get your company's Net Promoter score. (learn more - fee required).
 
Instead of complicated customer satisfaction surveys, this one question gets to the heart of the matter. I sometimes suggest people add a second question: "How likely are you to buy from this company again?" Are the other questions in your customer satisfaction survey getting in the way?
 
Gary Lemke, Publisher
(Share your thoughts)
 
11/30/05 - Net Promoter - Necessary, But Not Sufficient
I received some well articulated messages regarding my thoughts on making the customer satisfaction survey simpler by getting to the heart of the loyalty questions. Many in the industry call it the Net Promoter score; I call it the acid test. The acid test is this: "How likely is it that you would recommend our company to a friend?"
 
The responses were fairly uniform suggesting the Net Promoter score is a great high level metric but more detailed data is needed to understand what changes will improve customer loyalty. Other questions like, "What don't you like" or "What can we do better?" often help organizations direct the required changes.
 
I certainly agree with those comments and hope people don't stop at institutionalizing Net Promoter metrics. Or, for most organizations, start using this very important tool. Any guess on what percentage of today's organizations actively measure Net Promoter scores?
 
Gary Lemke, Publisher
(Share your thoughts)
 
12/1/05 - Customer Satisfaction v Net Promoter Scores
"What about customer satisfaction surveys?" That is what many of you wrote in response to my thoughts on the Net Promoter (NP) metrics. Let me use today's column to share why I think they are totally different.
 
NP scores tell you more about how well you are doing in the eyes of your customer. Many organizations post exemplary customer sat figures only to find those "satisfied" customers would not be a reference nor make an unsolicited referral. Even more striking is that many “satisfied” customers might not ever make another purchase. The key point is that satisfied customers are not always retained or loyal customers. Big difference here.
 
So when an organization touts their customer satisfaction score, challenge them by asking about their Net Promoter score as well as their customer retention rate. Those two factors tell more about the health of the company and the value of their products and services.
 
Gary Lemke, Publisher
(Share your thoughts)
 
12/2/05 - How Many Companies Use NP?
Very few. At least that is the opinion of many of our readers. Some peg the figure in the 10% range. Others feel that number is too low while still others think that number is too high. Of course, this is not a scientifically researched number so let's just stick with "the vast minority of companies use NP.”
 
However, some are seeing leadership. One reader noted, "It's an idea that's catching on at the highest levels at companies, even being discussed in quarterly earnings calls from companies like GE, Intuit and FileNet." Another reader suggested, "NP is like reporting your 'earning per share'. You certainly need more details to run the business...but the analysts use that one number to gauge overall performance."
 
In summary, not many organizations are doing NP metrics today but enough are seeing it as a way to establish leadership and growth. Likewise, expect to see more organizations embracing NP in the near future.
 
Gary Lemke, Publisher
(Share your thoughts)
 
12/9/05 - Net Promoter - Clarification
I'm going to take a break today from the "build versus buy" discussion but I want to let you know that it will be tops on the list for discussion next week. Especially, since so many of you have responded with great input.
 
I want to use the end of the week edition of this column to clarify my earlier thoughts about a single measure for customer loyalty because I think some people might have the wrong impression. In review, I stated that I believe the best measure for customer loyalty is the Net Promoter (NP). However, I am not suggesting that it is the only measure.
 
As I stated in my 11/30/05 entry, I think the NP metric is necessary but not sufficient. It's a great start but it won't tell you everything you need to know. It's fair to say that I am a big NP fan and I have featured it front and center because it's a great way to start measuring loyalty. Here's my promise to the 90% of companies that don't measure NP: Once you start measuring NP on a regular basis, you'll understand what additional metrics you need.
 
Gary Lemke, Publisher
(Share your thoughts)