Building customer loyalty through NPS - Views from Satmetrix, ING, Philips and Carl Zeiss
Retaining existing customers remains one of brand managers' most pressing concerns. This can be seen in the emergence of new metrics to measure customer loyalty such as the Net Promoter Score (NPS), the concept of which was popularised by Fred Reichheld of Bain & Company in 2003.
Since then, many of the world's larger advertisers have begun measuring their NPS. And Satmetrix, a company specialising in customer experience management, has been an assiduous promoter of the metric over recent years.
In its recent Net Promoter Conference held in London, Satmetrix presented some of its latest NPS thinking, and clients also gave insights into their own practical experience with the metric.
What is NPS?
Businesses measure their own NPS via a three-stage process:
- Customer feedback forms include the so-called NPS question: "How likely is it that you would recommend our company to a friend or colleague?" on a sliding scale from 0 (very unlikely) to 10 (very likely).
- Those customers who answered from 0 to 6 are considered to be "detractors" of the company. Those who answered from 7 to 8 are "passives". Those who answered 9 or 10 are "promoters".
- The NPS itself is determined by calculating the percentage of "promoters", and deducting the percentage of "detractors". Therefore, a score of 0 indicates neutral sentiment, 50 broadly positive sentiment and -50 broadly neutral sentiment.