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Net Promoter Score

Are you using the Net Promoter Score (Reichheld, 2003)? You should at least understand what this important measure tells us about buying behavior and customer acquisition….

When I ask small business owners what their main source of new business is, the most common answer by far is word of mouth. I have mixed feelings about this answer because word of mouth is bar none/hands down the best marketing you can get. It also aligns with

my philosophy of business. Make something (or do something) so awesome that people can’t keep quiet.

My mixed feeling come in when that business is struggling to grow, and they have decent word of mouth but anemic underdeveloped marketing systems. I believe in a solution I call enhanced word of mouth or empowered word of mouth (more on that in another blog post). Indeed social media is making it easier for people to cast there vote on a business: they can share their delight or vent their ire.

So if word of mouth is the best form of marketing it would stand to reason that a business would want to measure how likely a customer is to tell others about you. Thus the Net Promoter Score!

What is the Net Promoter Score? A loyalty metric based on responses to a single question, that is typically asked in an anonymous way: How likely is it that you would recommend our company/product/service to a friend or colleague?

The scoring for this answer is most often based on a 0 to 10 scale. Those who respond with a score of 9 or 10 are called Promoters, and those who respond with a 0 – 6 are detractors. The score is derived by by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. Those who respond 7 – 8 are passives, and count towards the total number of respondents and thus affect percentages.

Scores can range between -100 and +100, and a score above zero is positive and above 50 is excellent. So if you polled 100 customers and 10% are promoters and 12% are detractors and 80% are passives. The score would be -2.

YOU WANT PROMOTERS! Promoters are considered more likely to exhibit loyal behaviors, such as larger purchases, remaining customers for longer, and recruiting other potential customers. Knowing how to do enhanced word or mouth and getting promoters is Business Kung Fu.

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