Net Promoter Score (NPS): Can one simple question measure customer loyalty or engagement and also predict future performance? Yes, according to Frederick Reicheld of Bain & Company and Dr. Laura Brooks, who jointly developed NPS as a tool for measuring loyalty. The Net Promoter Score is based on just one question fielded to the customer: “How likely is it that you would recommend this product/service to a friend or colleague?” Customer responses are solicited on a scale of 0 to 10, where 0 indicates no likelihood of referrals and 10 means that the customer will certainly make a positive recommendation. Based on the scores, customers are grouped into three categories: promoters (those who marked 9-10), neutral (7-8) and detractors (0-6). The difference between the percentage of promoters and that of detractors makes up the Net Promoter Score.

NPS is ideally tracked on a monthly basis to ensure that the organization has more promoters than detractors at any given point. Survey results show that when applied across an entire customer set, NPS can accurately predict a company’s growth potential. While the average company has an NPS of only 5% to 10%, the leaders in customer loyalty like Southwest Airlines and American Express cross the 50% mark.

The BestPrax Club recognizes the “Net Promoter Score” as a PowerPractice™. A PowerPractice™ is a managerial practice that is so innovative that it has changed the rules of the game, resulting in huge gains for the organization. Have you witnessed a potential PowerPractice™ in action in your organization, or elsewhere? If yes, we would like to hear about it.