Measuring client loyalty
The Net Promoter System (NPS), developed by Fred Reichheld and Bain & Company, is used by leading professional services firms and businesses, including PwC, KPMG, Deloitte, BDO, Apple and Amazon, to measure and improve client satisfaction and loyalty. For over a decade it has become the global standard in loyalty measurement.
One simple question
The extensive research of Fred Reichheld and Bain & Company found that the single-most effective predictor of client loyalty was their now famous ultimate question.
Net promoter score
The goal of NPS is to sort clients into three categories, promoter, detractor and neutral, that predict behaviours enabling different responses from the firm.
Subtracting the percentage of detractors from the percentage of promoters produces a Net Promoter Score. A positive score indicates that you have more promoters than detractors, whereas a negative score indicates the reverse.
Promoters, according to Bain & Company's research, are typically advocates for your firm. They provide referral business and a host of other benefits (clients giving scores of 9 or 10 are considered promoters).
Detractors, on the other hand, are generally dissatisfied and can damage your brand through 'bad worth-of-mouth' (clients giving scores of 6 or below are considered detractors).
Neutrals are satisfied but unenthusiastic and potentially vulnerable to switching firms, often without warning (clients giving scores of 7 or 8 are considered neutrals).
It's the journey
Importantly, the value of NPS is not in the score. The value comes from the process, from establishing a structured process of client listening and then focusing the entire organisation around 'learning from and acting on' the valuable feedback that comes from clients. This process is the fuel that drives a continuous service improvement culture – the true source of sustainable growth.