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January 19, 2006
WOM Conference Note: Measuring Customer Loyalty with One Question
The buzz term here in Orlando at THE buzz marketing conference (Word of Mouth Marketing Association's Basic Training) is "NPS" which stands for Net Promoter Score. In a nut shell, it's a tool for measuring customers' likelihood of referring your other potential customers. It boils down to asking your customers one simple question: How likely are you to recommend X to a colleague or friend? Then throw out the middle scores, take the top (promoters) and subtract the bottom scores (detractors) and you have your net promoter score.
NPS poster-child Intuit and a few other companies have made it part of their company culture to the point that they're not too worried about whether a viral marketing campaign delivered specific behavior, much less word-of-mouth marketing metrics (WOM units). They just care whether their NPS score goes up or down. And since it's their ultimate measure of customer satisfaction, their job depends on it.
Here's what the Satmetrix Web site says of their product:
Net Promoter® is a ground-breaking new approach that links customer experience to growth. After years of research in collaboration with Frederick Reichheld, Bain & Company, and Dr. Laura Brooks of Satmetrix, we have developed a simple analysis that is the best metric for understanding and reinforcing the drivers of top-line profitable growth.
Reichheld says accountants don't care about measuring customer loyalty because they're more focused on milking all the profit they can out of their contented customer cows, when they should be focusing on keeping them contented. Communications pros should at least pick up the new book which explains it all, Reichheld's The Ultimate Question, since the language of the book is becoming part of the vernacular of business.
Posted by Bob Brin at January 19, 2006 8:00 PM