Net Promoter: The Elixir For Better Customer Engagement

The Net Promoter Score as founded by Bain and Company is the measure of how well a company treats its customers. It is basically based on the question ‘how likely is it that you would recommend our company or product to your friends?’. The question will have a rating scale of 1 to 10, 1 being not likely at all and 10 being extremely likely.
This helps companies in making important decisions and framing appropriate marketing and selling policies. Among the three kinds of customers a company would have, the net promoter score is the number or percentage of the promoters less the number or percentage of detractors. The promoters are of course the people who are likely to recommend the company or product to his/her friend and the detractors are the ones that are highly unlikely to do the same.

According to certain findings by the Net Promoter System, almost 80% of a company’s business referrals are through promoters and detractors are responsible for up to 80% of negative word of mouth. That said, it is quite clear how important the Net Promoter Score is for a company. Now how does it benefit an organization?

Using the Net Promoter Score can have a number of benefits:

  • Increase customer loyalty – Gone are the days when companies used to measure the level of customer satisfaction for deciding how loyal they are. You need to know how happy they are and what they would do about it in order to analyze their loyalty and strategize selling and customer relationship techniques accordingly. This single question for assessing the net promoter score not only helps to know exactly what is in the minds of the customers but also helps to analyze the effects of the changes you make in your techniques later on.
  • Increase positive word of mouth – This score gives you an idea about how much of your customers are promoters of your company. That is, how many of them are likely to speak positively about your company and advocate it. For example, a score of 50% means almost half of your customers are happy and would spread that word. You can leverage such customer advocates and generate referral leads and thereby increase your customer base.
  • Decrease customer churn rate – Several pieces of research by Bain and Company have proved that promoters have generally lesser tendency to defect when compared to other customers. Hence, they are likely to have a longer-lasting relationship with your company. This means you can safely invest in improving such relationships and turning more detractors into promoters and reduce customer churn. Since customer acquisition costs are always on the rise, it would be wise to reduce customer churn and improve business.
  • Increase revenue and customer lifetime value – Since the Net Promoter Score helps to increase the number of promoters, it in turn helps to increase your revenue. According to findings by Bain and Company, promoters are likely to spend more on new offers and products than the detractors. Hence, it would be worthwhile to have more of them. They are found to be less price sensitive too, which means they would not be bothered about how much they spend when it comes to their purchases. And as mentioned before, they account for a majority of referrals and thereby a larger customer base.

Apart from all these factors, promoters are the loyal customers of a company. They have higher customer lifetime value than other customers. Hence, for every company such customers are quite useful to increase customer base and also profits. Assessing the Net Promoter Score can practically help you in every way in growing your business.

Interested in how you can implement and identify a Net Promoter Score for your business? Look at how solutions such as ReachOut automates key functions of customer engagement and helps run your business better.

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    About the Author

    Ashmitha Chatterjee

    Ashmitha works with Fingent as a creative writer. She collaborates with the Digital Marketing team to deliver engaging, informative, and SEO friendly business collaterals. Being passionate about writing, Ashmitha frequently engages in blogging and creating fiction. Besides writing, Ashmitha indulges in exploring effective content marketing strategies.

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