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Reg Goeke: Add as a Colleague
Net Promoter Score was developed by Reichheld, was initially promoted by Bain and Co, and is currently being marketed by Satmetrix. NPS is a calculation based upon a single survey question regarding the respondent's willingness to recommend..... The calculation is, itself, quite simple: subtract the % of "detractors (1 - 6 on a 10 pt scale, or 0 - 6 on an 11 pt scale) from the % or "promoters" (9 and 10 on that same scale) and that's your NPS. There's been a bit of controversy about both the methodology and its utility. Those who use it like the simplicity of it; those who have rejected it argue that it's just a report card measure and lacks managerial utility. I work with several companies that use NPS as a report card, but supplement that will the metrics of customer value. We have found that the value metrics are highly predictive of NPS, but have the added advantage of providing real managerial direction. The Value Model reveals the relative importance of Quality, Image, and Price in the buyer's purchase decision, and also reveals what the critical-to-quality factors are, along with their relative importance. The Competitive Value Matrix essentially reveals your current competitive value proposition, and reveals the size and direction of the competitive gap in your value performance. By "peeling back the onion" on that gap, you'll know precisely where you can leverage and what you must fix in order to enhance your value proposition. The Loyalty Matrix will reveal which of your customers (and how much revenue) is at risk of defecting. And the Competitor Vulnerability Matrix will identify the low-hanging fruit from your competition. By acting on these value metrics (making key process, people, and product/service improvements), you will directly improve your NPS! Hope that helps.

02/20/2009 11:04:03 AM EST