What Is a Net Promoter Score? (And Why It’s Critical for Service-based Businesses)

If you could ask your clients just one question, would it be “How likely is it that you would recommend our company to a friend or colleague?”

Established by Bain & Company in 2003, the Net Promoter Score was created to help companies measure customer loyalty, using a single question survey conducted by phone, email or web, with a 10-point rating scale and a short answer section. How willing your customers are to recommend your services to others determines which category they fall into: promoters, passives or detractors.

Promoters are loyal customers that have longer, more profitable relationships with your company. Attrition rates are significantly lower within this group than that of “passives” or “detractors.” Passives have a referral rate up to 50% lower than those of your promoters, and it’s this group of customers that are at risk of being lured away by competitors. Detractors account for 80% of negative word-of-mouth and have the highest rate of attrition.  (Source: netpromotersystem.com)

Your final Net Promoter Score is determined by subtracting the percentage of detractors from the percentage of promoters. A score of 50% is considered a fairly good score for most businesses.

So why is a Net Promoter Score critical for service-based businesses, and what are the benefits?

1.  Quickly measure and evaluate customer loyalty. By asking one question, you’re able to link business outcomes directly to the improvements in your customer loyalty levels.

2.  Track responses to improve satisfaction. Using your Net Promoter Score to track customer satisfaction from one service call to the next allows you to clearly see whether changes have had a positive or negative impact.

3.  Easily identify customer advocates. Leverage your loyal customers to gain word-of-mouth referrals and new business leads.

4.  Collect actionable customer feedback. The additional feedback left by customers can be used to proactively address any issues that arise, allowing you to resolve the problem in a positive manner and stopping it from occurring with other customers.

5.  Grow business by lowering attrition rates. Once you know which clients are your promoters, you can invest in improving the customer experience and converting passives and detractors into promoters, reducing attrition rates.

6.  Increase customer lifetime value. According to research from Bain & Company, your promoters typically cost less when it comes to selling, marketing and advertising and also have larger average order sizes.

Escalation of a service call can jeopardize the customer relationships you have worked very hard to maintain, and how well your company handles these less than ideal situations is just as important as how you handle the best-case scenarios. Using the Net Promoter Score allows you to develop a system for improving your customers’ experience – helping turn detractors to promoters, and keeping your promoters sending referrals to you.

Did you know that the Miracle Service Event Manager module can also be used to track your company’s Net Promoter Score?

When a service call is completed, a closed job notification is automatically delivered directly to your customer’s email inbox. This custom text or HTML notification email contains a link to an online survey (like Survey Monkey) for customers to complete. This can be used to respond to a Net Promoter Score survey and track your customers’ satisfaction.

High customer satisfaction leads to more repeat sales. Contact us to learn more about our Event Manager module and how it can help you improve customer satisfaction.