The Numbers Behind the Net Promoter System
If you wanted to motivate your entire organization to take the actions necessary to earn your customers' loyalty, how would you do it? One way would be to give everyone in the organization a simple, intuitive and immediate indicator of when they had succeeded or failed in that quest. This was what motivated us to develop the Net Promoter Score®, a simple, accurate and intuitive way to gauge customer loyalty.
Our goal was to ask one and only one question of customers to estimate their loyalty—a question that was respectful of their time, yet would yield answers that could inspire employees to action. The best single question—across many industries and cultures—turned out to be "How likely are you to recommend [our product or service] to your colleagues, friends or family?"
The answer to that question is the basis for the Net Promoter Score, which lies at the core of a Net Promoter System®. (Learn more about the research behind the score.)
This metric creates a simple scorecard for the organization that has been shown by Bain & Company research, as well as research by a growing number of unaffiliated experts and executives, to explain significant variations in revenue growth rates among companies in head-to-head competition. In Bain & Company research, differences in relative competitive Net Promoter Scores explain anywhere from 10% to 70% of the variation in subsequent revenue growth rates among direct competitors. The Net Promoter® leader in a market grows, on average, more than two times faster than its competitors in that market.
The “likelihood-to-recommend”question also allows executives to sort customers into one of three groups: promoters, passives, and detractors. These simple, easy-to-understand groups behave differently, with promoters generally staying longer, buying more and telling their friends, and the other groups doing less of this. While on average, the lifetime value differences between detractors and promoters tend to run from 3X-8X, Bain & Company recommends that individual companies develop their own analysis of the customer value of each of these groups, since customers in different businesses, different competitive environments and different geographic markets differ in the extent to which their behaviors vary.
For more on these differences in individual customer value, see the following resources:
- Loyalty economics (netpromotersystem.com)
- "Likelihood to recommend" tops customer experience measures (The Temkin Group)
- The Power Behind a Single Number (Satmetrix)
While an individual customer’s Net Promoter Score, also known as a "bottom-up score," predicts future individual value, a different type of score—relative Net Promoter Score, or "top-down score"—explains differences in company growth among competitors. Though sometimes confused, these two types of scores are collected and used differently—to learn more, see Bottom-up and top-down scores. For more about how relative Net Promoter Scores explain differences among competitors, see the following resources:
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