Net Promoter Score: why Fidelity Life wants you to watch this number
Fidelity Life wants you to pay attention to your net promoter score.
Recently Fidelity Life has announced a return to focus on net promoter score as a measure of customer satisfaction with advisers, and rewards for advisers that do well on this metric. If you’re wondering why they think this is important, this primer is for you:
The Net Promoter Score (NPS) is a metric used to gauge customer loyalty and satisfaction based on one simple question: “On a scale from 0 to 10, how likely are you to recommend our company/product/service to a friend or colleague?” The responses are used to classify customers into three categories: Promoters (9-10 score), Passives (7-8 score), and Detractors (0-6 score). A five-point scale can also be used. The score is calculated by subtracting the percentage of Detractors from the percentage of Promoters. Passives are ignored. The resulting score can range from -100 to +100. This simple metric offers immediate insight into customer satisfaction and loyalty.
NPS became popular due to its simplicity and strong correlation with revenue growth. It was introduced in 2003 by Fred Reichheld, a partner at Bain & Company. It is detailed in this Harvard Business Review article (fee required to access). You can see how its simplicity enabled it to quickly catch on. I even have a friend who runs a company which focuses on a very simple way to add this measurement to your website.
It’s a number we have used from time to time in managing our business. Some big companies use this a lot. One example of a high-scoring organisation is Apple. Don’t take my word for it, check out this link: https://surveysparrow.com/blog/apples-nps/ Apple’s consistent focus on customer experience and product innovation has helped it maintain a high NPS, often cited as being in the 70s or even 80s. This score reflects strong customer loyalty and satisfaction, translating into repeat business and positive word-of-mouth. On the other hand, telecommunications companies often score poorly in NPS benchmarks. I am sure you can think of one.