The Net Promoter Score was introduced back in 2003 by Fred Reichheld with the purpose of helping companies measure and evaluate customer loyalty. A company’s Net Promoter Score is one of the most useful metrics for gauging the potential of organic growth in its customer base. In its purest form, Net Promoter Score can be described with one straightforward question:
“How likely is it that you would recommend (Company X) to a friend or colleague?”
It may seem odd in our world of complex metrics and overwhelming customer data, but this simple question around loyalty has been the driving force of game-changing improvements for countless companies.
Asking the Question
Let’s take a look at how the scoring works for the Net Promoter Score. Once you ask the question of your customers, they can answer based on a scale of 1 to 10 and the score is broken down into three categories:
9 to 10 – These are your Promoters. Also known as enthusiasts, promoters are your most loyal customers who keep buying from a company and urge friends, family and colleagues to do the same.
7 to 8 – These are your Passives. Passive customers are satisfied with what you provide but are not overly enthusiastic. If your customers fall in this category, they may be easy targets for your competition.
0 to 6 – These are your Detractors. Customers who had a poor or substandard experience with your company are in this category. Unhappy customers are also a concern because they may spread negative comments online or by word-of-mouth.
To calculate your company’s Net Promoter Score, take the percentage of customers who are Promoters and then subtract the percentage who are Detractors. The final number is your positive or negative Net Promoter Score. For example, if you had 65% of your customers listed as Promoters and 20% of your customers as Detractors, your score would equal +45. On the flip side, if you had 20% of your customers listed as Promoters and 30% of your customers as Detractors, your score would equal -10.
Why It Is Important
Now that you have a basic understanding of the Net Promoter Score and how it’s measured, let’s look at a few statistics from research done by Bain & Company.
- Promoters account for more than 80% of referrals in most businesses.
- Promoters generally defect at lower rates than other customers, which means that they have longer, more profitable relationships with a company.
- Passives have a repurchase rate as much as 50% lower than those who are Promoters.
- Detractors account for more than 80% of negative word-of-mouth.
- On average, an industry’s NPS leader outgrew its competition by a factor greater than two times.
Launch Marketing’s NPS for 2014
As an organization that prides ourselves on providing exceptional services and results to clients, we take great care in surveying our clients on an annual basis to gauge client satisfaction. We are excited to announce that in the survey areas of Reliability, Flexibility and Professionalism, Launch Marketing received 100% Above Average to Excellent ratings from our clients, with a majority rating Excellent. Not only that, but more than half of our clients indicated that they are 10/10 (100%) likely to recommend us to clients, and more than two-thirds rated us 9 out of 10 and higher.
In a benchmark study, of scores submitted in the B2B services sector, they average to a 61.6, and the highest submitted is a 70.3. You can understand why we are proud and thrilled to receive a net promoter score of +70.5 for 2014. To put our score further into perspective, according to a benchmark study by Satmetrix, companies with the most efficient growth engines operate with an NPS of 50 to 80.
As we continue to deliver turn-key marketing services focused on delivering leads and driving revenue, client success and satisfaction remain top priorities.
Need help surveying your clients to determine your Net Promoter Score? Contact Launch Marketing today! Be sure to follow us on Twitter and like us on Facebook to keep up with the latest B2B marketing tips and trends.