Editor’s Note: A Net Promoter Score®, commonly referred to as NPS®, is a straightforward metric that measures customer experience and appears to be a predictor of company growth. Introduced in 2003, the interest in NPS continues to grow and last year, according to the Wall Street Journal, “net promoter” or “NPS” was cited more than 150 times in earnings conference calls by 50 S&P 500 companies. Based on the importance of customer experience for eDiscovery businesses and the increasing investor activity in the data and legal discovery ecosystem, the following article extracts may be beneficial for understanding current thinking, historical origin, and evolutionary application of this salient measurement of customer satisfaction as it appears to be a number of increasing interest to both organizational leaders and industry investors.
The Dubious Management Fad Sweeping Corporate America
An extract from an article by Kadeeja Safdar and Inti Pacheco as published by the Wall Street Journal
Much of Corporate America is obsessed with its net promoter score, or NPS, a measure of customer satisfaction that has developed a cultlike following among CEOs in recent years. Unlike profits or sales, which are measured and audited, NPS is usually calculated from a one-question survey that companies often administer themselves.
The score was introduced in 2003 in 2003 in a Harvard Business Review article titled “The One Number You Need to Grow.” The Bain & Co. consultant who wrote the article called NPS the “simplest, most intuitive and best predictor of customer behavior” and a “useful predictor of growth.”
Since then, the metric has taken on a life of its own.
The One Number You Need to Grow
An extract from an article by Frederick Reichheld as published in Harvard Business Review
A customer’s willingness to recommend to a friend results from how well the customer is treated by frontline employees, which in turn is determined by all the functional areas that contribute to a customer’s experience.
For a measure to be practical, operational, and reliable—that is, for it to determine the percentage of net promoters among customers and allow managers to act on it—the process and the results need to be owned and accepted by all of the business functions. And all the people in the organization must know which customers they are responsible for. Overseeing such a process is a more appropriate task for the CFO, or for the general manager of the business unit, than for the marketing department. Indeed, it is too important (and politically charged) to delegate to any one function.
The path to sustainable, profitable growth begins with creating more promoters and fewer detractors and making your net-promoter number transparent throughout your organization. This number is the one number you need to grow. It’s that simple and that profound.
If Your Net Promoter Score (NPS) is Flatlining, Double-Down with Data
An extract from an article by Lisa Abbott as published on Customer Think
[Regarding Customer Satisfaction] You simply can’t rest on your laurels. Here is why:
- Your competitors sure aren’t resting. Today [Customer Experience] CX is THE competitive battlefield. Analysis by Bain Consulting shows that sustained value creators—companies that achieve long-term profitable growth—have Net Promoter Scores (NPS) two times higher than the average company. And Net Promoter System® leaders on average grow at more than twice the rate of competitors.
- It is becoming easier than ever for your customers to go elsewhere. Salesforce surveyed 6,700 customers and statistics are eye-opening. For starters, the research found that 76% of customers now report that it’s easier than ever to take their business elsewhere — switching from brand to brand to find an experience that matches their expectations.
- Your customers expectations are only getting higher. Salesforce also found that as customers interact with companies that are committed to experience, their expectations change. “Disruptive companies leverage breakthroughs in cloud, mobile, social, and artificial intelligence technology to deliver improved experiences. As a result, they grow to expect this superior experience from any business they engage with.” In other words, the smooth experience customers have ordering a flat white on the Starbucks mobile app, or summoning a ride using Lyft, impacts their satisfaction with you and your brand regardless of what industry you are in.
The Evolution of Customer Experience Leads Back to the Employee
An extract from an article by Rachel Lane as published on CMS Wire
Over the last 10 years we have seen customer experience (CX) programs mature from small impromptu customer feedback initiatives into scalable, omnichannel, multi-lingual engagement programs that are the life force of change and improvement.
Many organizations are far from nailing this down, but a large portion have programs that easily identify areas of customer pain and understand the impact to their business as a result. The boardroom will always look for new ways to pivot the business for a competitive advantage, or to stay ahead of market disruption. Customer voice is a strong influencer in business decision-making, so what else can a business to do to make sure things run smoothly? Enter: The voice of the employee (VoE).
Voice of the employee is set for a meteoric rise from the boardroom down to the frontline. Once a poster child of a strong HR department, the employee feedback program has evolved a long way from annual performance reviews, six-month relationship surveys, or even that suggestion box sitting in the staff room.
Businesses that are combining the two elements [Voice of the Customer and Voice of the Employee ] are already seeing some impressive results. A large enterprise organization has increased customer net promoter score (cNPS) by 14 points and employee net promoter score (eNPS) by 20 points, which is significant given that a score of 30 points is classed as an average performance. Many large enterprises will intrinsically link their NPS to sales turnover or profit and know how much a one-point shift is worth to their business.
The Confidence Question – What Is It & What Does It Mean for NPS?
An extract from an article as published on Retently
Even though NPS (Net Promoter Score) is a great metric, there are people who think it has its fair share of issues. Lincoln Murphy (a well-known customer success professional and keynote speaker) is one of them, and he actually came up suggesting a new metric – the Confidence Question – to be used instead of or alongside NPS. Here’s everything you need to know about it, together with the main differences between the two.
The Confidence Metric
Here’s the given reason why this new metric should be used: Essentially, businesses need to focus more on how confident their customers are in their ability to offer them a solution – not on how happy they are with their brand. The goal for any business is to make sure clients have 100% confidence in their service/product. Anything less is a problem.
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