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The Startup Physical: What’s Your Net Promoter Score?

Net Promoter

I’m an entrepreneur, you’re an entrepreneur, we’re all entrepreneurs.  We’re startup folks.  We’re intuitive and fast moving.  We listen to our gut, and our gut is always right.  We don’t need structure, meetings, badges, or metrics…that’s for the big guys.  I’m a hipster iGal/iGuy. I’m like the living, breathing, re-incarnation of Steve Jobs on steroids.

So why do I need an “establishment” tool like the Net Promoter Score (NPS)?  I mean, I don’t know what NPS is, but I’m sure I don’t need one of those silly thingamajigs. I have my finger on the pulse of the business, and we’re smokin’ hot!

What Is The Net Promoter Score? 

According to Wikipedia, Net Promoter is a customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, and Satmetrix. The most important proposed benefits of this method derive from simplifying and communicating the objective of creating more “Promoters” and fewer “Detractors” — a concept claimed to be far simpler for employees to understand and act on than more complicated, obscure or hard-to-understand satisfaction metrics or indices.

In addition, proponents claim the Net Promoter method can reduce the complexity of implementation and analysis frequently associated with measures of customer satisfaction, providing a stable measure of business performance that can be compared across business units and even across industries, increasing interpretability of changes in customer satisfaction trends over time.

What’s That Mean? 

That means that the Net Promoter Score is a simple tool that measures and tracks a company’s products and services as it relates to customer satisfaction. It’s a tool that makes it simple to track, measure, and diagnose customer satisfaction and trends.

So How Does It Work?

The Net Promoter Score is obtained by asking customers 1 simple question that is answered on on a scale of 1  to 10, where 10 is “extremely likely” and 0 is “not at all likely.”  For example, “How likely is it that you would recommend our company to a friend or colleague?”

Customers are then categorized into three groups:

  1. Promoters (9–10 rating)
  2. Passives (7–8 rating)
  3. Detractors (0–6 rating)

The percentage of Detractors is subtracted from the percentage of Promoters to obtain the Net Promoter score (NPS). Scores over 50 are excellent.

So How Do I Use the NPS?

Contact your customers. Ask them the above simple question.  Collect the answers and track NPS by customer facing individuals. The steps:

  1. Contact your customers and track your scores
  2. Try and track a corporate score and break down scores by all customer facing team members
  3. Graph the scores and the trends
  4. Learn which team members have the best scores and their best practices are
  5. Learn which team members are dragging down the company score and what actions can you take to improve their performance (or maybe you should replace them)

Conclusion:

NPS is like a routine physical for your company.  You may feel healthy.  You may think things are going great.  But just because you feel good doesn’t mean you don’t have high blood pressure or high cholesterol.  People get an annual physical to make sure they’re healthy, and when one or more important metrics raise a red flag, they put programs in place to correct the condition.

If customers are the life blood of a company, NPS is a metric that illustrates the health of the company’s blood.  Use and understand it before your competitor uses it against you.

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About the Author

Glen Hellman (@glehel), is an angel investor, serial entrepreneur, and works for venture capitalists as a turn-around specialist. He is the Chief Entrepreneureator at Driven Forward LLC, frequently muses on his blog, Forward Thinking, and works with entrepreneurs to help them figure out what to do and get them to do it.

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