The One Number You Need to Grow

Oct 23, 2023


The One Number You Need to Grow

In the fast-paced world of business, one number has emerged as a game-changer, a compass that guides companies toward unprecedented growth and success. It's a number that simplifies complex customer satisfaction measurements, yields unambiguous results, and directly correlates with profits and expansion. We're talking about the Net Promoter Score (NPS). In this post, we'll explore the concept of NPS and how it can transform your company's trajectory by cultivating intensely loyal customers and fostering rapid growth.

The Magic Question

Many businesses invest significant time and resources in measuring customer satisfaction, but the results are often ambiguous, complex, and not necessarily tied to growth. The good news is that you don't need expensive surveys or complex statistical models. All you have to do is ask your customers one simple question: "How likely is it that you would recommend our company to a friend or colleague?" The more "promoters" your company has, the faster it can grow.

But why is the willingness to promote your company such a strong indicator of loyalty and growth? It's because when customers recommend you, they're not just endorsing your product or service; they're putting their own reputations on the line. They'll take that risk only if they're intensely loyal. By asking this one question, you collect simple and timely data that directly correlates with growth, and you get responses that are easy to interpret and communicate. Your message to employees becomes clear-cut, actionable, and motivating, especially when tied to incentives.

Calculating Your Net Promoter Score

To calculate your Net Promoter Score, you need to ask a statistically valid sample of customers the magic question: "How likely is it that you would recommend our company to a friend or colleague?" Based on their responses on a 0 to 10 rating scale, group your customers into three categories: "promoters" (rating 9–10, extremely likely to recommend), "passively satisfied" (rating 7–8), and "detractors" (rating 0–6, extremely unlikely to recommend). Then subtract the percentage of detractors from the percentage of promoters. Companies that achieve world-class loyalty typically receive net promoter scores of 75% to more than 80%.

Using Your Net Promoter Score

Your NPS provides valuable insights into how to get more promoters and reduce detractors. You can compare your company's scores region to region, branch to branch, sales rep to sales rep, and customer segment to customer segment. This allows you to uncover root causes of differences and share best practices from your highest-scoring groups. Don't forget to survey your competitors' customers using the same method to see how your company stacks up against the very high bar of 75% to 80% NPS.

Motivating Change

To leverage the power of NPS, you must use your score to send a clear message to managers and employees about the importance of promoters and the dangers of detractors. Here are some guidelines:

  • Ensure that everyone in the company knows which customers they're responsible for, and make sure all business functions, not just market research, own and accept the survey process and results.
  • Make your scores transparent throughout your organization. Share numbers showing the percentages (and names) of customers who are promoters, passively satisfied, and detractors. Then issue the managerial charge: "We need more promoters and fewer detractors in order to grow."
  • Create a sense of urgency by tying rewards to score improvement. This essentially gives customers veto power over raises and promotions. For example, Enterprise Rent-A-Car saw its survey scores rise and growth increase relative to its rivals by making field managers ineligible for promotion unless their branch or group of branches matched or exceeded the company's average net promoter scores.

In conclusion, the Net Promoter Score simplifies the path to growth by focusing on one essential metric: customer loyalty. By asking the simple question, analyzing the responses, and using the data to motivate change and improvements, companies can cultivate intensely loyal customers and steer their businesses toward unprecedented growth. In a world where complexity often reigns supreme, sometimes the simplest questions yield the most powerful answers.