Can one simple question measure customer loyalty or engagement and also predict future performance?

Net Promoter Score (NPS): Can one simple question measure customer loyalty or engagement and also predict future performance? Yes, according to Frederick Reicheld of Bain & Company and Dr. Laura Brooks, who jointly developed NPS as a tool for measuring loyalty. The Net Promoter Score is based on just one question fielded to the customer: “How likely is it that you would recommend this product/service to a friend or colleague?” Customer responses are solicited on a scale of 0 to 10, where 0 indicates no likelihood of referrals and 10 means that the customer will certainly make a positive recommendation. Based on the scores, customers are grouped into three categories: promoters (those who marked 9-10), neutral (7-8) and detractors (0-6). The difference between the percentage of promoters and that of detractors makes up the Net Promoter Score.
NPS is ideally tracked on a monthly basis to ensure that the organization has more promoters than detractors at any given point. Survey results show that when applied across an entire customer set, NPS can accurately predict a company’s growth potential. While the average company has an NPS of only 5% to 10%, the leaders in customer loyalty like Southwest Airlines and American Express cross the 50% mark.

– Source: BestPrax Insight – Customer and Market Outcomes

The BestPrax Club recognizes the “Net Promoter Score” as a PowerPrax™.
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Explore posts in the same categories: 03 Customer and Market Focus, 12 Business Results, Business, Management, Marketing

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2 Comments on “Can one simple question measure customer loyalty or engagement and also predict future performance?”

  1. Yes, we recently got some results from NPS survey and it was quite revealing.

  2. I read a very interesting article on author Dan Kennedy’s website.

    In this article, Kennedy emphatically states, “Without an ever increasing number of truly satisfied customers nothing else matters. Repeat business is the most important business. That’s where most profit is derived from, that’s where stability comes from, and that’s the foundation of a solid secure business.”

    That’s what the NPS will enable organizations to do. For the score can also be interpreted to be the ratio of customers who are loyal and guaranteed to come back with repeat orders, to customers who are unhappy and may only generate bad publicity.

    It’s the age of the empowered consumer, who can air their disgust on multiple mediums of information namely television, radio, and most importantly the Internet – resulting in a PR nightmare for any organization. It therefore becomes all the more important for organizations to strive for a high NPS score.

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