Magazine article Strategic Finance

Promoters vs. Detractors

Magazine article Strategic Finance

Promoters vs. Detractors

Article excerpt

The balance of power in the business world is shifting away from the corporations to those who buy from them and to those who work for them. Business leaders must find ways to enable frontline teams to delight customers by knowing what customers are expecting and how to establish accountability for the customer experience. The Ultimate Question 2.0, by Fred Reichheld, shows how companies can put themselves on the path to true growth by ensuring that the business goal isn't merely to delight customers but, rather, to turn them into customers who buy more and who actively refer friends and colleagues.

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The "Ultimate Question" is typically phrased "Would you recommend us (or this product/service/brand) to a friend?" The responses to this question help a company put its customers into three groups: promoters, passives, and detractors. Promoters represent successes, passives are just satisfied, and detractors represent serious failures. From this data, a company can calculate its Net Promoter Score (NPS): percentage of promoters minus the percentage of detractors. NPS stars such as Amazon, Costco, and United Services Automobile Association (USAA) operate at NPS ratings of 60% to more than 80%.

Over the years, the Net Promoter Score has evolved from a basic metric to measure loyalty into the Net Promoter System, a comprehensive business philosophy, system of operational practices, and leadership commitment. The System includes these fundamental elements:

1. Companies systematically categorize promoters and detractors in a timely, transparent fashion.

2. Companies create closed-loop learning and improvement processes and build them into their daily operations and key decision processes.

3. CEOs and the entire senior leadership team embrace the improvement of customer loyalty through the NPS as a mission-critical priority. …

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