The one number you need to grow
Two years of research and several thousand interviews with customers in different industries have shown that one simple question – in most industries – is tightly linked to any company’s actual growth rate. That one question, answered by the company’s customers, is:
-“How likely is it that you would recommend our company to a friend or a colleague?”
The more promoters you have, and the more enthusiastic they are, the bigger the chance of company revenue growth. Hence, a large portion of truly evangelistic customers is a fantastic asset. But only when its share of the total customer base is larger than the detractors.
On a scale from 1-10, where 10 is “extremely likely” and 1 is “not at all likely” it is only the customers that choose nine to ten (9-10) that counts as “promoters”. Even a rating at as much as seven to eight (7-8), i.e. still fairly likely that the customer would recommend the company to a friend or a colleague, doesn’t correlate with growth. That bunch of customers are by the way defined as “passives” (e.g. not active evangelists). The “detractors” on the other side, will not likely recommend the company at all, and even bad-mouth it.
The higher the number of promoters vs the number of detractors and passives, the higher the company growth. The one number you need to grow is hence the “net promoter score”, which is the ratio of promoters to detractors. As simple as that.
Why is then this willingness to promote a company such a strong contributor to growth? In short it can be seen as the ultimate act of loyalty, where the individual – the customer – puts his or her own reputation on the line. Or as Frederick Reichheld put it in the HBR article:
-“Evangelistic customer loyalty is clearly one of the most important drivers of growth. While it doesn’t guarantee growth, in general profitable growth can’t be achieved without it.”
Read more about the results and the underlying research in the Harvard Business Review article: The One Number You Need to Grow, by Frederick Reichheld. You can also join the Net Promoter Community to learn best practices, make connections and share experiences, and even get your own Net Promoter certification.
About Inquentia
We identify, explore and develop opportunities for growth and renewal, powering the future of our clients’ teams, brands and businesses. Always from a market and customer perspective. In the process we help create time for reflection, train, guide, coach and involve our clients’ teams to utilize their skills and develop their capabilities, resulting in ownership and faster implementation.
