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Net Promoter is a customer loyalty metric developed by (and a registered trademark of) Fred ReichheldBain & Company, and Satmetrix. It was introduced by Reichheld in his 2003 Harvard Business Review article “The One Number You Need to Grow”[1]. 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, and increasing interpretability of changes in customer satisfaction trends over time.

The Net Promoter Score is obtained by asking customers a single question on a 0 to 10 rating scale: “How likely is it that you would recommend our company to a friend or colleague?” Based on their responses, customers are categorized into one of three groups: Promoters (9-10 rating), Passives (7-8 rating), and Detractors (0-6 rating). The percentage of Detractors is then subtracted from the percentage of Promoters to obtain a Net Promoter score. A score of 75% or above is considered quite high. Companies are encouraged to follow this question with an open-ended request for elaboration, soliciting the reasons for a customer’s rating of that company or product. These reasons can then be provided to front-line employees and management teams for follow-up action.[2] Local office branch managers at Charles Schwab Corporation, for example, call back customers to engage them in a discussion about the feedback they provided through the NPS survey process, solve problems, and learn more so they can coach account representatives[3].

Proponents of the Net Promoter approach claim the score can be used to motivate an organization to become more focused on improving products and services for customers. They further claim that a company’s Net Promoter Score correlates withrevenue growth. Discussed at length in The Ultimate Question: Driving Good Profits and True Growth by Fred Reichheld, and “Answering the Ultimate Question” by Richard Owen and Laura Brooks, the Net Promoter approach has been adopted by several companies, including E.ONPhilipsGE[4]Allianz[5]P&G[6]Intuit[7]American Express[8] and Westpac Banking Corporation.

source: Wikipedia

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