What is Your "Net Promoter Score?"

Last week, my Entrepreneurial Consulting classes were lucky enough to have a visit from Bain & Co. Fellow Fred Reichheld. Fred has developed a simple but powerful metric of customer loyalty that he calls the "net promoter score" (NPS). The score is calculated by asking customers on a scale of one to ten how likely they would be to recommend the company to a friend. Subtract Detractors (scores of 1 - 6) from Promoters (9s and 10s), and you get your NPS. Fred's research has shown that high NPS companies grow much faster than low NPS companies. Thinking in terms of NPS leads firms to adopt a strategy of delighting customers at all times. The most common question from the classes is "this is so simple - why doesn't every company do it? A very good questions indeed. It occurred to me during the presentation that startup firms, who are desperate to differentiate themselves from their larger competitors, actually have an advantage in customer service because they are much closer to their customers. Startups would be wise to take customer loyalty very, very seriously as they develop their strategies.