Yesterday in passing, iI overheard a claim, with reference to Curly (Jack Palance) in the 1991 movie City Slickers, "if there was just one thing needed to help your business, it was looking at your "Net Promoter Score."
The Secret Sauce
Every company searches for that "secret sauce" that differentiates them from their competition and allows them to increase margins and charge higher prices. In some cases, the "secret sauce" is not so secret as it is commonly-known information that has been re-branded with a new name and trademarked to ensure exclusivity.
Almost everybody in business has encountered rather ubiquitous rating scales from one to ten, one being the worst and ten being the best, that accompany a single question. Allegedly to give a respondent a more expressive range of responses than love it or hate it.
Now imagine if there was a single question you could ask your prospects and customers such as "How likely is it that you would recommend our company/product/service to a friend or colleague?" with the result scored from zero to 10.
BINGO: You now have the trademarked "Net Promoter Score," a customer loyalty metric that can help you advance your organization's agenda.
"Those who respond with a score of 9 to 10 are called Promoters and are considered likely to exhibit value-creating behaviors, such as buying more, remaining customers for longer, and aking more positive referrals to other potential customers.
Those who respond with a score of 0 to 6 are labeled Detractors, and they are believed to be less likely to exhibit the value-creating behaviors.
Responses of 7 and 8 are labeled Passives, and their behavior falls in the middle of Promoters and Detractors.
The Net Promoter Score is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. For purposes of calculating a Net Promoter Score, Passives count towards the total number of respondents, thus decreasing the percentage of detractors and promoters and pushing the net score towards 0.
Companies are encouraged to follow the likelihood to recommend question with an open-ended request for elaboration, soliciting the reasons for a customer's rating of that company or product. These reasons can then be provided to front-line employees and
management teams for follow-up action." <Source>
But if you look closely, this is the basis of most metric-driven improvement systems because it concentrates management's attention on a simple, easy-to-measure metric that is almost guaranteed to produce results given the level of management-employee attention.
Of course, there are those who claim that one you define the metric, it becomes useless as people find ways to game the system to produce favorable metrics. And, there are those who employ expensive consultants to sell the idea to the Board of Directors and to add gravitas to the process in order to impress investors, customers, prospects, and others.
No matter how the process is implemented or by whom, if you can execute the concept, you might just have found a way to save your company and your job.