Leadership

#11: Develop Raving Fans with NPS

From The 30 Best Business Practices of All Time, published by PROFITguide.com: Canada's trusted resource for entrepreneurs and innovative executives

Written by PROFIT staff

As a general rule, a customer is unlikely to return to a business where they feel they have received an inferior product or service. That same customer is just as unlikely to recommend the business to someone else. This axiom lies at the core of a powerful customer-loyalty metric known as the Net Promoter Score (NPS).

NPS is explained in detail by business strategist and author Fred Reichheld in his 2006 book, The Ultimate Question: Driving Good Profits and True Growth. The NPS method distils the concept of customer loyalty down to one essential question: “How likely are you to recommend this product or service to a friend or colleague?” After a transaction is completed, the goal of NPS is to get customers to rank their response to this crucial question on a scale from 0 (“not at all likely”) to 10 (“extremely likely”). Based on a given customer’s score, they can be categorized as Detractors (0-6), Passives (7-8) or Promoters (9-10).

Subtract the percentage of Detractors from Promoters (ignoring the Passives), and you have your NPS. According to NPS services provider Satmetrix, corporate NPS leaders include Costco (with an NPS of 71) and Apple (also 71). But any NPS score over 20 places you among the better customer-service firms in the world. So, you can imagine the joy that 1-800-GOT-JUNK? CEO Brian Scudamore must feel every day: his firm’s current NPS is 83. Its secret to turning junk-removal clientele into raving fans? Making NPS a focal point of employee thinking rather than just another number. “We reinforce the importance of the score by talking about it constantly and trying to get everyone in the business to take ownership of it,” says Scudamore. “And that pushes constant improvement in all aspects of the business.”

Originally appeared on PROFITguide.com
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