More than two-thirds of the Fortune 1000 list currently use Net Promoter Score, a customer loyalty metric introduced by Fred Reichheld in a 2003 Harvard Business Review article, “The One Number You Need to Grow.”
One number. And to get to that one number, you only have to ask one question: “On a scale of 0 to 10, how likely are you to recommend this [product/brand/company/service]?”
Anyone who scores 0-6 is considered a Detractor. Passives rate 7 and 8. Promoters are those who score 9s and 10s – extremely likely to recommend.
The Net Promoter Score is calculated by subtracting Detractors from Promoters. Scores can range anywhere from -100 to 100. It couldn’t be simpler, or more powerful.
Since 2003, the popularity of that one number has grown exponentially, spawning specialty apps to track it and spurring researchers to study it. The most recent study by Temkin Group of 10,000 U.S. consumers showed a direct connection between NPS and customer loyalty across 20 industries. In 291 companies, NPS was highly correlated to the likelihood of repeat purchases from existing customers. In fact, promoters across those 20 industries were 92% more likely to make more purchases than detractors (not surprising), were 9 times more likely to try new offerings, and 5 times more likely to repurchase. Promoters were also 7 times more likely than Detractors to forgive companies if they made a mistake.
Loyalty is lucrative.
The ability to measure and improve it is imperative. And that’s where NPS comes into play.