I’m always looking for “Just 1 Number” – that single metric which shows immediately how the company is doing across all departments. I thought I’d found it and wrote my first Benchmark column on the subject in September 2005. I called it the SNIPPY which represents an index relating customer satisfaction to net profit. I’m still fond of the SNIPPY, but I might be the only one.
However the June 2008 issue of Fortune Small Business calls the NPS a “magical metric. It’s called a Net Promoter Score and essentially it measures customer satisfaction and referrals.”
“Here’s how NPS is implemented. First, ask your customers to rate you on a scale of 0 to 10 based on the question, How likely is it that you would recommend this company to a friend or colleague? Then sort the responses into three groups: promoters (9s and 10s), passive (7s and 8s) and detractors (0 through 6s). The percentage of promoters minus the percentage of detractors equals your score. A company with 75% promoters and 15% detractors, for example would have an NPS of 60.”
So now you’re wondering what a good score might be. The article states “as a rule of thumb, score above 50 and you’re a star.”
You might well have this information at hand from client satisfaction surveys you’ve done in the past. If you’re going to determine your own NPS score, be sure to separate current information (past 12 months, for example) from historic. That way you’ll have a trend line. Also be sure to accumulate sufficient data to have statistical reliability. Two clients, for example, would not be a very small sampling on which to base your assumption.
Read the entire article here:
http://money.cnn.com/2008/05/21/smallbusiness/customers_sell_for_you.fsb/index.htm