In today’s data-saturated marketing world, prioritization is undoubtedly a must. While it’s important to take advantage of the in-depth insight and advanced reporting tools now available (the more you know, the better, right?), it’s also important to establish which metrics take precedence and truly indicate success. And while each department (sales, marketing, upper management, etc.) looks at different metrics to measure their own success, it’s also interesting to consider this question on a grander scale.

So, if your company as a whole could only measure one metric, what would it be?

In 2003, Fred Reichheld introduced the concept of a Net Promoter Score (NPS) in his Harvard Business Review article, “One Number You Need to Grow.” He proposed measuring customer loyalty with one ultimate question: How likely, on a scale of 1-10, are you to recommend this product to a friend? Those at the upper end of the scale are “promoters” of your brand, while those who fall at the bottom are “detractors” and those in the middle are “passives.” The average of these scores is your net promoter score and can fall anywhere between -100 and +100. Companies should strive for an NPS of +50.

Whether or not you agree that your net promoter score is the ultimate metric to determine the success of a business, here’s three reasons that you should keep an eye on this number.

The customer knows best. If you’re too focused on catering to new prospects, you’re not going to be in tune with the people that know your product best – your current clients. Your customers have the knowledge and the feedback to make your product better, and ultimately more sellable. And keeping your customers satisfied keeps churn rates low, which has a significant financial impact.

It’s just one question. This means you have at least a 50/50 shot of receiving an answer. How often are you bombarded with requests to complete a survey? Probably daily, and unless you have something particularly raving or particularly scathing to say, you probably don’t take time out of your day to give feedback. But if you’re only asking for a number in response to one question, more people are likely to participate, enabling you to get a sense of your overall customer satisfaction.

Recommendations are powerful. There’s a reason why social media marketing has exploded and Google is now including social feedback in its search results: social validation goes a long way. With the rise of inbound marketing, consumers are seeking out their own information and traditional advertising is less effective, but a recommendation from a friend still holds a lot of weight. Listen to customer feedback, monitor customer satisfaction, ask them if they’d recommend you to a friend – and hope they actually do!

What are your thoughts on the effectiveness of the Net Promoter Score? Share them in our comments section!

Molly Hoffmeister

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2 responses to 3 Reasons to Measure Your Net Promoter Score

  1. Molly:

    Great summary. In the nine years since the original Harvard Business Review article was written, we’ve learned a lot about how to use NPS more effectively. I’d recommend to your readers a visit to the website Fred Reichheld and I created to summarize the progress and state of the art: http//netpromotersystem.com.

    Best of luck,

    Rob Markey
    Bain & Company, Inc.

    • Molly Hoffmeister August 20, 2012 at 11:02 am

      Hi Rob,

      This is great! I enjoyed reading through some of your posts on the Loyalty Blog. Thanks so much for sharing and for your feedback.