Leveraging Net Promoter ScoreSM in Your Business
Section 3: What is Net Promoter Score? Let's break it down.
Net Promoter Score, or NPS, is an industry-standard measurement of customer experiences and predictor of future business performance.
NPS is a customer loyalty metric that businesses use to understand how their customers truly feel about a product or service. It uses the question, "Would you recommend this company to a friend?" as a way to get the customer thinking outside of the minutia of their personal experience and instead think critically about their relationship with the business.
After years of research and data collection, Fred Reichheld came to the conclusion in The One Number You Need to Grow, that "the percentage of customers enthusiastic enough about a company to refer it to a friend or colleague directly correlated with growth rates among competitors." He found that when a person recommends a company or product, it triggers an emotional response, as they are putting their own reputation on the line backing that business. If they are suggesting it to a friend or colleague, they are standing up for the product in a way that they risk their own reputation– a true testament to loyalty.
Net
Final, after all deductions or considerations.
In terms of income and profit, the word "gross" includes all the income that is received, regardless of expenses. "Net" is usually what is left after subtracting expenses from the gross.
"Net", in the case of Net Promoter Score, refers to the subtraction of your critics from your super fans, giving a net number that is used in the calculation.
Promoter
One who contributes to growth or prosperity.
Promoters are people who love your business or brand. They are your super fans and are key to the success of your business.
We will talk more on the term "Promoter" later in the paper, as it is a key principle behind Net Promoter Score.
Score
Number kept track of.
We all know about scores from sports and school. In the case of Net Promoter Score, it is a measurable metric that can be compared over time to help businesses understand their customer loyalty and guide their future business practices.
This is the "number" that Fred Reichheld is referring to in his article, One Number You Need to Grow.
Put it all together and… Net Promoter Score is an industry-standard measurement of customer experiences and predictor of future business performance.
"Net Promoter Score (NPS) is a customer loyalty metric that businesses use to understand how their customers truly feel about a product or service"
Tune in next month for the next section from our latest whitepaper "Leveraging Net Promoter Score in Your Business".