All Posts Tagged With: "net promoter score"
Recommendability Boosts Revenues
Net promoter score (NPS) is a measure of customer loyalty that many companies are using instead of customer satisfaction surveys. You determine your NPS by asking customers a single question: “How likely is it that you would recommend our company to a friend or colleague?” Customers use a 0 to 10 rating scale, and their responses are categorized as Promoters (9-10 rating), Passives (7-8 rating), and Detractors (0-6 rating).
You determine your NPS by subtracting the percent of Detractors from the percent of Promoters. Scores of 75% or higher are considered very good.
Church of the Customer Blog recently reported on the 2010 NPS Industry Benchmark reports released by Satmetrix. The NPS leaders by industry are:
- Airlines: Jet Blue (64%)
- Auto Insurance: USAA (78%)
- Banking: USAA (81%)
- Brokerage & Investments: Charles Schwab (46%)
- Cable & Satellite TV: DIRECTV (27%)
- Cellular Phone Service: Verizon (41%)
- Computer Hardware: Apple (78%)
- Consumer Software: Adobe Systems (37%)
- Credit Cards: American Express (27%)
- Department, Wholesale & Specialty Stores: Costco (66%)
- Grocery & Supermarkets: Trader Joe’s (69%)
- Health Insurance: BlueCross BlueShield of Illinois (5%)
- Homeowners Insurance: USAA (69%)
- Internet Service: Road Runner/Time Warner (21%)
- Life Insurance: State Farm (34%)
- Online Search & Information: Facebook (65%)
- Online Shopping: Amazon.com (71%)
A few things jump out of this list. First, health insurance companies stink. If 5% is the best…
14Apr2010 | Steve George | 0 comments | ContinuedWhy Customer Loyalty Matters
A lot of organizations pat themselves on the back when their percent of satisfied customers is consistently in the high 90s. In contrast, a lot of high-performing organizations ignore customer satisfaction scores because the scores don’t reveal what needs to be improved or how loyal these satisfied customers are.
Instead, high-performing organizations track either the “top box” trend (customers who give them a “5″ on a 5-point scale) or their net promoter score, which segments customers in three categories (promoters, passives, and detractors) based on their responses to a “likely to recommend” question. The number of promoters minus the number of detractors divided by the total number of surveys produces the net promoter score.
A higher net promoter score or “top box” score means more loyal customers. Why is that important?
According to a Strativity study of nearly 2,000 consumers in the U.S. and Canada earlier this year, companies that deliver exceptional customer experiences have significantly lower customer attrition, the ability to charge higher prices than their competitors, and the ability to capture a higher percentage of their customers’ wallets.
The following graph from Strativity’s report on the study illustrates the value of customer loyalty:
Strativity Graph
Here’s another compelling argument: 40% of loyal customers said they…
6Aug2009 | Steve George | 0 comments | Continued
