A Need to Measure: How does a business know if its customers are likely to repurchase or send their friends?
The answer usually involves the Net Promoter Score™ or NPS.
As you likely know, the NPS was created by Fred Reichheld as part of his work with the consulting group Bain & Company. Fred refers to the single question used to calculate NPS as the Ultimate Question.
So, what is that “Ultimate Question?”
On a scale of 0-10, how likely are you to recommend ________ company to a friend or colleague?
The Net Promoter Score is calculated by subtracting the percentage of people in the detractor category (people who answer the NPS question with a 0-6) from the percentage in the promoter category (people who answer 9 or 10).
For me, the NPS approach is more of a categorization SYSTEM than a SCORE.
It’s important to categorize customers who are PROMOTERS accurately because
The Risk of Emphasizing the Score
Unfortunately, because many people think the NPS (and other engagement metrics) are about the score, they end up with distorted information.
Here’s an excellent example from my friend and former team member Ryan Walsh (Program Manager – Loyalty Program Strategy at Albertsons Companies). Ryan received this after a visit to McDonald’s.
For the sake of this post, let’s assume that the register receipt led to an NPS question, and Ryan gave a 10 rating. Do you think he would be accurately categorized as a PROMOTER?
In next month’s newsletter, I’ll address ways to get accurate categorizations on the NPS and how to get your PROMOTERS to refer their friends.
For now, I hope we can agree the NPS is NOT actually about the SCORE.
Written by Joseph Michelli, Ph.D.
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