Entrepreneurs: Here’s What You Need to Know About Your Company’s ‘Net Promoter Score’

Entrepreneurs: Here’s What You Need to Know About Your Company’s ‘Net Promoter Score’

NPS . And it's an important measure that emerges when you ask your customers the most important question of all. By answering this question with a "yes" or "no" or providing a number, 1 to 10, on a sliding scale, customers indicate whether they would promote your business to other people. Responses to that question create that net promoter scale, or NPS. Considering that the average email inbox receives 121 emails per day, it's no wonder that the average survey response rate is just over 3 percent. Tracking your company's NPS does not automatically change anything in your company. There has to be a company culture aligned with customer feedback on that question. What product managers need to know about NPS. "Product managers need to own NPS," said Olson. CSAT = Customer satisfaction score OSAT = Overall satisfaction score Effort score = Ease of use Customer lifetime value = total value of customers By triangulating this metric within other related data points, a product manager will be able to see his or her company's customer experience for what it is: integral to the growth of the company.

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NPS . . . No, it’s not some acronym for an entrepreneurial disease. Instead, it means “net promoter score.” And it’s an important measure that emerges when you ask your customers the most important question of all. Can you figure out what that would be?

You probably can because, believe it or not, there is actually broad consensus within the business community about what that question should be: Fred Reichheld, the Bain & Co. executive who created the NPS concept, has said that 66 percent of Fortune 1000 company promoters ask this question. And they say that the response they get is crucial to understanding the health of their business.

Esentially, it comes down to this: “Would you recommend our product or service to a friend?”

By answering this question with a “yes” or “no” or providing a number, 1 to 10, on a sliding scale, customers indicate whether they would promote your business to other people. In a nutshell, that is how you know whether your company is on track to grow or shrink. Responses to that question create that net promoter scale, or NPS.

If you’ve heard of NPS, but aren’t too familiar with it, it’s been around since 2003, as a management tool used to gauge customer loyalty. Typically, customers receive an email asking for their participation in a one-question survey. More spam in my inbox? they think. No thank you. Considering that the average email inbox receives 121 emails per day, it’s no wonder that the average survey response rate is just over 3 percent.

Despite that small percentage, NPS can be a great baseline for evaluation. And, when it’s executed correctly — such as through an “in-app” questionnaire — it can be so much more valuable than an anonymous query. In other words, we have just begun to scratch the surface of extracting value from this data point.

What entrepreneurs need to know about NPS.

Tracking your company’s NPS does not automatically change anything in your company. Instead, you have to make it important. There has to be a company culture aligned with customer feedback on that question.

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