Net Promoter Score
Where’s The Money? Finding Your Best Lender
June 11, 2019
Exit Strategy Business 101 in Florida
February 14, 2020
Net Promoter Score, or NPS, has become a widely accepted gauge of client satisfaction and business success.
SCORE Manasota has an Net Promoter Score or NPS of 91.6. This is an extremely high score, in the neighborhood of a company such as Tesla (96). Each year NICE Satmetrix, co-developer of Net Promoter, benchmarks leading brands according to their NPS scores. These scores can be used to compare your business to your competitors. Higher scores correlate with business growth and success.
The most recent Satmetrix survey included 68,000 U.S. respondents in 23 industry sectors, with 1,000 or more responses per brand and 192 brands. A higher NPS will account for increases in organic growth ranging from 20% to 60%, conversion rates for referral leads are 30% better, and a 2% increase in customer retention, which has the same effect as decreasing costs by 10%.
What is Net Promoter Score?
According to Hotjar.com, Net Promoter Score (NPS) is a customer loyalty score, ranging from -100 to 100, calculated by asking customers one question: “On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?”
NPS helps companies of all sizes focus on their mission-critical goal of increasing their score by earning more enthusiastic customers who can be tracked and quantified over time.
According to Satmetrix, NPS drives customer retention, improves customer affinity and maximizes positive word-of-mouth to deliver overall improvements in customer lifetime value.
What is a good Net Promoter Score?
Average NPS by industry:
The top five include Department/Specialty Stores (52), Tablet Computers (51), Brokerage/Investments (46), Online entertainment (43), Online Shopping (43).
The bottom five includ: Internet Service (-7), Cable/Satellite TV (-6), Health Insurance (14), Travel Websites (18), Drug Stores/Pharmacies (26).
Average NPS Leaders by Industry:
Department & Specialty Stores — Costco (74)
Auto Insurance — USAA (73)
Airlines — Southwest (71)
Hotels — Ritz Carlton (68)
Laptop and Tablet Computers — Apple (68)
According to Retently.com, an NPS of -100 to 0 means your business needs improvement; a score of 0 to 30 is considered good; a score of 30 to 70 is great; and a score of 70 to 100 is excellent.
Some markets never get an NPS above 20. You can compare your score with competitors by looking at NPS average scores in your industry and against competitors.
Understanding how NPS is determined – Based on the 0 to 10 rating system:
• Scores from 9-10 are Promoters
• Scores from 7-8 are Passive
• Scores from 0-6 are Detractors
Promoters are customers who are highly likely to recommend a company (ratings of 9 or 10) and exhibit the highest rates of purchase and referral behaviors. Passives are customers that were somewhat likely to recommend a Company (ratings of 7 or 8) and exhibit moderate rates of purchase and referral behaviors. Detractors are customers who were less likely to recommend a company (ratings of 0 thru 6) and exhibit the lowest rates of purchase and referral behaviors.
The formula for determining NPS is taking your percentage of Promoters and subtracting your percentage of Detractors. This gives you your Net Promoter Score (NPS).
% Promoters – % Detractors = NPS
Why NPS is important
According to Retently.com, the most important aspect of NPS (that many companies miss) is that the number is just a metric. More important is the qualitative feedback you get from NPS and what you do with it to make sure you’re improving your customer experience. Utilize your Net Promoter Score to help you track and maintain the relationship you’ve created with your audience. Your main goal should always be to listen to the voice of your customers and act on it.
Forrester Chairman and CEO George F. Colony said “Net Promoter is becoming a driving force within organizations.” Net Promoter is today’s standard for measuring customer loyalty.
NPS correlates directly with business success
Research has shown that an NPS correlation coefficient of 0.89 results in companies with higher NPS enjoying higher long-term growth rates, whereas firms with lower NPS have lower long-term growth rates. An individual who recommends a company to friends and colleagues may be the most direct gauge of customer loyalty and financial success.
Measuring word-of-mouth
NPS accurately measures the net effect of word-of-mouth. It is a powerful metric for gauging long-term growth because it takes into account the growth achieved through positive referrals as well as the lost potential for growth caused by the effects of negative word-of-mouth.
If you are interested in learning how your company can determine its Net Promoter Score and have happy customers who recommend you, please write to me at dennis@Time4Exit.com. Also, you may request the NPS list for Top Brands and I will email the list of 100 companies to you.
You may also benefit from this article on Improving Your Business Value. CLICK link below
Better, not necessarily bigger, when selling your business
https://s3.amazonaws.com/mentoring.redesign/s3fs-public/Business%20SCORE%20Card%20eBook%204-27_1.pdf
Take this 13-minute Value Builder test to see how your business stacks up in your industry. CLICK below
