On The Trail

There’s a new KPI making the rounds called the “Net Promoter Score”. The score is pretty simple. It’s based on a single survey question: “How likely are you to recommend us to a friend”, 10 = very likely, 1 = not likely. Subtract the percentage who answer 1-6 from the percentage who answer 9 or 10 and you have your score.

Fred Reichold came up with the metric and wrote a book on it (Ultimate Question: For Driving Good Profits and True Growth). The book just came out, so the buzz machine is starting to pick up on it. I haven’t read the book, but there are two good articles on it here and here.

According to Reichold the big deal about this metric is that a high Net Promoter score is a very good predictor of high revenue growth. It’s kind of a “Duh” conclusion if you think about it. Obviously companies that have satisfied customers will tend to have higher growth rates, and those who have dissatisfied customers who complain to their friends will tend to be less successful. The cool bit is that it provides a concrete measure to something squishy like “customer satisfaction” — and Reichold has data to show that differences in this measure actually matter.

The other cool bit is that a single question is pretty easy to ask on your website or in a follow up email. Before today, if someone asked me to measure “Customer Satisfaction” I’d break out in a cold sweat, but maybe it really isn’t so hard!