Why You Need to Upgrade to Net Promoter Score 3.0

Net Pro­mot­er Score (NPS) is an absolute favorite of mine to sim­ply get a pulse on what your cus­tomers or employ­ees are think­ing and feel­ing about your com­pa­ny. By ask­ing them how like­ly they are to rec­om­mend your com­pa­ny to a friend or col­league, you get an indi­rect mea­sure of word-of-mouth mar­ket­ing. Which is the ulti­mate for grow­ing your rev­enues or your team.

Cal­cu­late your Net Pro­mot­er score

Just a refresh­er, peo­ple are cat­e­go­rized into three dif­fer­ent groups:

• Pro­mot­ers — peo­ple who rate you 9 – 10 for their like­li­hood to rec­om­mend you.
• Pas­sives – sat­is­fied but unen­thu­si­as­tic peo­ple who score you 7 – 8.
• Detrac­tors – unhap­py peo­ple who may spread neg­a­tive word-of-mouth.

To get your Net Pro­mot­er Score (a range from +100 to ‑100), sub­tract the per­cent­age of detrac­tors like­ly telling peo­ple to stay away, from the per­cent­age of pro­mot­ers like­ly to say good things about you.

Get valu­able information

In our work with many com­pa­nies, around the world, to imple­ment and use NPS to dri­ve bet­ter team align­ment and cus­tomer engage­ment, we’ve found it a very sim­ple and effec­tive pulse of how they’re doing as a com­pa­ny. Indi­vid­ual com­ments also guide us to specif­i­cal­ly what is done well, and what we can con­sid­er chang­ing to cre­ate a bet­ter cus­tomer or employ­ee experience.

By work­ing with some of the team at Bain & Com­pa­ny (cre­ators of the sys­tem), on one of our clients who did a very robust imple­men­ta­tion of NPS, I was very for­tu­nate to learn how to lever­age insights beyond net scores, to dri­ve bet­ter busi­ness decisions.

Prob­lems with misuse

We con­tin­u­al­ly find that NPS is mis­man­aged in com­pa­nies, par­tic­u­lar­ly when lead­ers are incen­tivized to get high scores. Humans are very cre­ative at find­ing ways to be suc­cess­ful, espe­cial­ly when there’s mon­ey on the line. Addi­tion­al­ly, when peo­ple are told how impor­tant it is to get a 10 rat­ing and then per­suades or strong­ly influ­ences some­one to give a high score, our cus­tomer or employ­ee expe­ri­ence can get worse.

How NPS 3.0 Works

This recent Har­vard Busi­ness Review arti­cle, NPS 3.0 (by Fred Reich­held, Dar­ci Dar­nell and Mau­reen Burns), adds a sec­ond mea­sure to cal­cu­late the return you’re get­ting on a great NPS — your Earned Growth Rate (EGR). They say that if you have a high engage­ment score, you should have a high degree of cus­tomer reten­tion and refer­rals that came from them. Sep­a­rat­ed from how much new busi­ness you paid for through sales and mar­ket­ing efforts. This can be con­firmed via account­ing results that mea­sure the source of new customers.

In the arti­cle, the authors share how to do the cal­cu­la­tions. When one of our advi­sors did it on our firm, we were very hap­py to see our score, since most of our busi­ness comes from refer­rals from exist­ing clients and relationships.

Sim­ple sum­ma­ry: If you invest heav­i­ly in thrilling your cus­tomers, the ROI you should get is your EGR, in terms of reten­tion and referrals.

How to fix a less-than-opti­mal EGR

If your EGR is what you want, congratulations!

If it isn’t, even with a high-engage­ment cus­tomer and employ­ee score, it may be a mat­ter of just remind­ing clients. Let them know that you have the capa­bil­i­ty, desire or band­width to take on addi­tion­al clients — and you would wel­come their referrals.

A low­er score can also open your mind to think what else you need to do. How can you turn your high­ly engaged cus­tomers or employ­ees into a stronger ROI?

Track­ing an NPS and EGR

In your KPI reviews, cal­cu­late NPS and EGR scores to see if they are in sync and how they cor­re­late. Addi­tion­al­ly, it helps to remind you that the reward for tak­ing great care of your cus­tomers is reten­tion and referrals.

The same thing should apply to your inter­nal team. Your EGR (in terms of new employ­ees) should cor­re­late when peo­ple are high­ly engaged. And, if you’re not get­ting enough refer­rals from your team for new hires, that means there’s dif­fer­ent work to do.

The Chal­lenge

• What do you need to do to under­stand and enhance your earned growth rate?

For more, lis­ten to Episode 111 of The Growth Whisperers.

Learn more about:

• Proac­tive Recruit­ment Strategies
• How to Build an Amaz­ing Peo­ple Mag­net Machine
• Exec­u­tive Team Alignment
• How to Keep Cus­tomers Happy
• Four Ques­tions to Ask Your Customers

Lawrence & Co’s work focus­es on sus­tain­able and enhanced growth for you and your busi­ness. Our diverse and expe­ri­enced group of advi­sors can help your lead­ers and exec­u­tive teams stay com­pet­i­tive through the use of var­i­ous learn­ing tools includ­ing work­shops, webi­na­rs, exec­u­tive retreats, or one-to-one coaching.

We help high-achiev­ing lead­ers to have it all – a great busi­ness and a reward­ing life. Con­tact us for sim­ple and impact­ful advice. No BS. No fluff.