Friday, August 3, 2012

Idea Gathering: Customer Experience News: Know Your NPS

As guest blogger Flavio Martin wrote during the 2012 Total Customer Experience Leader's Summit: "statistical precision matters." One of the statistical means of measuring customer experience discussed at the event was the Net Promoter Score or NPS. We're going to be hearing more about NPS during next week's webinar - specifically social engagement as the path to improving Net Promoter Score/Customer Satisfaction Index - so I wanted to do a deeper dive into this concept in this Idea Gathering wrap up.

First things first, what is a NPS? The term was first introduced in this Harvard Business Review Article "One Number You Need to Grow" by Frederick F. Reichheld. The number measures one simple thing: how likely a customer would be to recommend a company to a friend. The effectiveness of NPS is based on the following finding:
"In most of the industries studied, the percentage of customers enthusiastic enough about a company to refer it to a friend or colleague directly correlated with growth rates among competitors."

So, what's new in the NPS world? Time recently published a "small business tip of the day" entitled "Knowing Your Net Promoter Score Can Help Your Business" breaking down the importance of the NPS with the following statement:

"But it’s what you do with your NPS, not the score itself, that is the key to improving your business. As Customer Experience Professionals Association Chairperson Bruce Temkin notes, companies must ask the right questions of the right clients at the right time so they can understand why customers are Promoters, Detractors or Passives. Understanding those reasons is the first step toward a higher NPS — and more loyal customers."

NPS scored well as "the best customer measure" in this post on Harvard Business Review noting that "NPS is clearly a good predictor of the individual customer's attitudes" if not the absolute when it comes to measuring loyalty.

Finally, In the recent Forbes article "If You Aren't Social, You'll Shrink: 10 Steps To Becoming a Social Business" the author cites Enterasys as an example of a successful social business, noting that "Enterasys has produced 3 years of consecutive top-line year-over-year revenue growth, and a net promoter score of 81."

Interested in learning more? Join us for our free webinar "Driving Best-In-Class Customer Experience: Beyond Social Media Listening" on Tuesday, August 7, 2012 from 12:00PM - 1:00PM ET. Details here.

1 comment:

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