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Chapter 3 How the Net Promoter Score (NPS) Can Drive Growth
Company NPS*
USAA 82%
HomeBanc 81%
Harley-Davidson 81%
Costco 79%
Amazon.com 73%
Chick-fil-A 72%
eBay 71%
Vanguard 70%
SAS 66%
Apple 66%
Intuit (Turbo Tax) 58%
Cisco 57%
Fedex 56%
Southwest Airlines 51%
American Express 50%
Commerce Bank 50%
Dell 50%
Adobe 48%
Electronic Arts 48%
* Statistics based on Bain/Satmetrix studies
Extremely Not at
likely all likely
10 9 8 7 6 5 4 3 2 1 0
Chapter 3 How the Net Promoter Score (NPS) Can Drive Growth
In a company of our size and complexity, it becomes critically important to
simplify and focus on one number that is practical to measure. It is also vital
that this metric reliably link to profits and growth. Our experience with
satisfaction surveys has not been very good because they dont connect to
40%
R2: 0.93
MSN
30
Earthlink
20
AOL
10
-20 -10 0 10 20
Net Promoters
Source: Satmetrix NPS survey (Q1-Q4, 2002); company annual report.
o Conceptually, Reichheld points out that businesses who get referrals have
an unpaid sales and marketing team working on their behalf. Referrals
come from PROMOTERS.
o Employees and, especially, managers of the NPS-leading companies in the
book earn salaries in excess of their competitors. This includes a)
HomeBanc, where mortgage originators earn as much as $1 million per
year, and b) Chick-fil-A, where restaurant managers, on average, earn
$170,000 per year.
Why NPS Works
o You need to understand the value of your customers.
The traditional approach is to calculate the lifetime net present
value of a customer.
The problem with this approach is that not all customers are the
same, especially in terms of their value.
Retention rate: DETRACTORS have a lower retention rate
and, therefore, a much lower overall value.
Margin: PROMOTERS are generally less price sensitive
and, therefore, have a higher overall value.
Annual spend: PROMOTERS tend to spend more and are
more receptive to cross-selling.
Cost efficiencies: DETRACTORS complain more and,
hence, cost more.
High
A B C
Profitability
Low F E D
Passive
Detractor Promoter
High
Low
NPS
Understand the realities of your customer base. Circle size is for revenue.