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Net Promoter Score: The One Key Metric You Need for Customer Loyalty

Net Promoter Score

Creating and fostering relationships with customers is tough—especially in this era when competition is so fierce in almost every industry. We’ve written articles about collecting feedback from customers and combining that data with a CRM and artificial intelligence to mine it for valuable information. But what good is feedback if you don’t have a solid baseline of where your customer loyalty lies? How can you gauge improvement—or worse, deterioration—down the line? Many companies are finding the answer to be the Net Promoter Score.

Why Customer Feedback Matters

First, the cold hard facts. Did you know that 100 percent of survey respondents say they trust the feedback of other people—even people they don’t know—over brand advertising? What’s more, people love telling others about their terrible brand experiences! Surveys show nearly 50 percent of people who have had a terrible experience told more than 10 people about it. And in the day of social media—when irate customers can reach hundreds of “friends” at the click of a button—that number is surely rising.

By 2020, it’s projected that customer experience will be the most important brand differentiator—even more than price and product quality. So, the real question is: which side of CX will you land on? The positive? The negative? With the tools you’re currently using, would you even know the difference? If not, you need the Net Promoter Score.

Creating a Benchmark with Net Promoter Score

When it’s all said and done, we all need loyal customers promoting our business. These promoters are out there spreading the word about our company and their experience with it, even when we’re low on ad dollars or struggling to create the next killer disruption. The Net Promoter Score helps you create a baseline of how many promoters you have so you can keep that number growing.

To create your Net Promotor Score baseline, you simply survey your customers asking, “On a scale of 0 to 10, how likely are you to recommend us to a friend?”

  • Those answering 9 and 10 are your promoters—those who will actively good-mouth your company
  • Those answering 7 and 8 are your passives—those who probably won’t say much
  • Those answering 0 to 6 are your detractors—those who will actively bad-mouth your company

The goal, as always, is to have more promoters than detractors. To find out where you lie, you subtract your percent of detractors from your promoters. For instance: if you have 40 percent promoters, 20 percent passives, and 40 percent detractors, your Net Promoter Score is 0. What??? With 40 percent of customers loving your socks off? Yes, because remember: bad-mouthers are big-mouthers. Their score counts. So much so that when it comes to net Promoter Score, anything above 0 is considered a win. And once you know where you stand, you can always work to improve it.

What Net Promoter Score Can Do for You

Research shows it’s 5-25 percent more expensive to gain a new customer than it is to hold on to the ones you have. Your Net Promoter Score shows you not just how many customers you’re likely to keep, but which ones you’re in danger of losing. When it comes to CX, those are the customers who could cost you big, not just in terms of negative social media but in terms of lost profit and turnover. How can you focus your efforts on understanding their issues and how to win them over? And how can you get your promoters to love you even more?

Net Promoter Score isn’t an end-all, be-all. It’s a starting point to better understanding where you fall on the customer satisfaction scale, and how likely your customers are to hang out or jump ship. While it should not replace the other data you’re gathering on customer and user experience, you should ultimately see an increase in Net Promoter Score the more you work on addressing your CX and UX issues. It’s just one more tool to keep your company running straight and smooth—in a forward direction—in digital transformation.

Dan Newman

CEO of Broadsuite Media Group and President at V3B
Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. From Big Data to IoT to Cloud Computing, Newman makes the connections between business, people and tech that are required for companies to benefit most from their technology projects, which leads to his ideas regularly being cited in CIO.Com, CIO Review and hundreds of other sites across the world. A 5x Best Selling Author including his most recent “Building Dragons: Digital Transformation in the Experience Economy,” Daniel is also a Forbes, Entrepreneur and Huffington Post Contributor. MBA and Graduate Adjunct Professor, Daniel Newman is a Chicago Native and his speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
Dan Newman