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Net Promoter Makes Our Business, Essay Example

Pages: 1

Words: 834

Essay

The net promoter score is one that makes or breaks a business. Many consumers are able to see the net promoter scores for businesses. This customer service oriented score defines the satisfaction of customers for many different types of businesses. According to Wikipedia (2013), the “net promoter is a management tool that can be used to gauge the loyalty of a firm’s customer relationships. It serves as an alternative to traditional customer satisfaction research.” These scores are not only helpful to consumers, but also helpful to the businesses that use them as they explain how satisfied the company is making its customers. The net promoter score can be as low as -100 or as high as +100. Anything that is positive is said to be good, but anything over +50 is said to be excellent when using this tool (Wikipedia, 2013). The article entitled “Measuring your Net Promoter Score” (2013) states the following:

While easy to grasp, NPS metric represents a radical change in the way companies manage customer relationships and organize for growth. Rather than relying on notoriously ineffective customer satisfaction surveys, companies can use NPS to measure customer relationships as rigorously as they now measure profits. What’s more, NPS finally enables CEOs to hold employees accountable for treating customers right. It clarifies the link between the quality of a company’s customer relationships and its growth prospects.

The net promoter score is pretty simple to calculate. You start by asking a question and gather data in order to find the score. According to the article “Calculating your Net Promoter Score” (2013), individuals that respond on the high level (9 or 10) are considered promoters; however, those that respond on a low level (0-6) are considered detractors. In order to get the score, “the percentage of detractors is subtracted from the percentage of promoters.” “Calculating your Net Promoter Score,” 2013). For example, using the given numbers in the example, the net promoter score would be -28. In the example, there data is as follows: 1=0, 2=2, 3=2, 4=3, 5=0, 6=1, 7=3, 8=2, 9=3 and 10=2 (in other words, 1 person selected 0 as their response, 2 people selected 2 as their response and so forth). This is a total of 21 clients, 11 detractors and 10 promoters. The percent of promoters is 24 and the percent of detractors is 52. If you subtract these, you get -28. Therefore, this tells the company and the clients that this company does not have a good net promoter score. They are in the negative. When a company is in the negative in any way, it is not good. This score shows that customers are not happy with the company and its relationship with its customers is not satisfactory.

The net promoter score can assist in the value of a company in many ways. If customers know about this score, it is easy for them to look for it. This score will show them whether they would benefit from buying from the company or working with the company. This score can help or hurt the company, but if it is known to consumers, it can be a valuable tool for promoting the business. It is also valuable to the CEOs and partners within the company as it shows what they are lacking and what needs to be improved and why. For companies that are achieving high scores, this allows them to promote the business and gain other customers based on the score. Unfortunately, just as it can be good, it can also be bad for the company. There are many criticisms in reference to using this system.

There is criticism in reference to the NPS. According to Wikipedia (2013), “Hayes (2008) claimed there was no scientific evidence that the ‘likelihood to recommend’ question is a better predictor of business growth compared to other customer-loyalty questions (e.g., overall satisfaction, likelihood to purchase again.” Finally, it is stated the environmental factors may actually influence the customers’ response to a recommended type question. “Examples include comparing businesses with an associated social stigma (e.g., cigarettes or online dating) and businesses with different levels of service fulfillment (e.g., delivery services as compared to gyms)” (Wikipedia, 2013).

In conclusion, the Net Promoter Score can be very beneficial to companies and customers. It helps companies understand how satisfied its customers are and what they need to do in order to get a better understanding of what they need to do in order to make their company more profitable. Customers are also able to decide whether they want to work with the company or purchase from the company just by looking at the score. However, the criticisms of others in reference to the NPS are good to look into and it is good to understand where these individuals are coming from when putting factors out in the open.

References

Calculating your net promoter score. (2013). Retrieved from http://www.corsential.com/netpromoter-score/calculate-net-promoter-score/

Measuring your net promoter score. (2013). Retrieved from http://www.netpromotersystem.com/about/measuring-your-net-promoter-score.aspx

Wikipedia. (2013). Net promoter. Retrieved from http://en.wikipedia.org/wiki/Net_Promoter

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