What is Net Promoter?
Net Promoter is a methodology for measuring customer loyalty. It was developed jointly by Fred Reichheld, Bain Consulting and Satmetrix. Net Promoter was first introduced by Reichheld in an HBR article entitled “The One Number You Need to Grow“, and was later the topic of his book “The Ultimate Question“.
At the heart of the methodology is the idea that customer loyalty can best be predicted by the answer to a single question – “How likely are you to recommend (company name) to a friend or colleague?“. Respondents answer on a scale of 0 (not at all likely) to 10 (extremely likely). Based on the response to this question, respondents are categorized as Promoters (9-10), Passives (7-8) or Detractors (0-6). A company’s Net Promoter Score is simply the percentage of Promoters minus the percentage of Detractors.
Net Promoter is unique amongst loyalty measurement systems in several respects:
- Net Promoter calls for a census-approach, advocating sending the survey out to all customers with the ultimate goal being an obscene response rate of >60%. This differs from traditional thinking, which advocates sampling the customer population.
- Net Promoter surveys tend to be very sparse. Reichheld argues that loyalty surveys should consist of just two questions – the “ultimate question”, and a single text response field to capture additional customer comments.
- Proponents of Net Promoter view it as a holistic framework. It is not just a survey – it is a set of business processes that surround the survey. “Closing the loop” with respondents and engaging the entire organization are considered vital components of a successful Net Promoter program.
There is considerable controversy around Net Promoter, much of it based on valid criticism. There is substantial data that indicated that the Ultimate Question may not, in fact, be the ultimate question when it comes to predicting customer loyalty. That said, I’ve found it to be a good-enough metric coupled with an exceptional framework that makes it easy to kickstart a customer-centric revolution within most organizations.
The Ultimate Question by Fred Reichheld
Answering the Ultimate Question by Richard Owen and Laura Brooks, PhD.