In the December 2003 issue of the Harvard Business Review, Customer Loyalty Consultant Fred Reichheld presented a new way to measure customer satisfaction. He claimed that his new customer feedback metric would reveal powerful data about customer repurchase rates. In fact, Reichheld called this metric "the one number you need to grow." and "the ultimate question."
What is this groundbreaking number? Net Promoter Score® (NPS®). The net promoter question asks customers, “How likely is it that you would recommend our company to a friend or colleague?”
Responses range from zero to ten, and according to Reichheld’s system:
- Detractors (a score between 0 and 6) are customers who would complain about your company to friends and colleagues. These customers are not likely to re-purchase.
- Passives (a score of 7 or 8) are customers who have little to no impact on your company: they’re probably not coming back, but they’re also probably not going to bad-mouth you.
- Promoters (a score of 9 or 10) are customers who have high re-purchase rates and an equally high number of referrals.
The actual Net Promoter Score® of a company is the percent of promoters minus the percent of detractors. If you get a positive score, more people like your company than dislike it. If you get a negative score, you’re getting more trash talk than positive customer feedback.
The Harvard Business Review article became the foundation of Reichheld’s book, The Ultimate Question: Driving Good Profits and True Growth. The book’s success led to the rise of Reichheld’s company Satmetrix.
The widespread use of Net Promoter Scores has encouraged companies to focus on the commendable goal of creating more “promoters” and fewer “detractors.” Clearly, with the growing popularity of customer feedback via social media, keeping track of promoters and detractors has become a necessary business practice.
But is Reichheld’s question really the ultimate question? Net Promoter Scores have captured the imagination of businesses everywhere because the question is simple to understand and easy to ask. However, researchers not affiliated with Reichheld’s company raised concerns about Net Promoter; namely:
- Net Promoter Scores don’t relate to profitability.
- Net Promoter Scores do not accurately gauge customer loyalty.
For companies that strive to inspire, manage and predict customer loyalty, these are grave problems indeed.
Thinking about using Net Promoter Score®? Get a free Net Promoter Mini-Audit. You’ll get an expert opinion on whether the Net Promoter question is right for you. If it’s not, we’ll give you a better question.
- Reichheld, Frederick F. “The One Number You Need to Grow.” Harvard Business Review, 81 (December 2003), 46-54.