industry research
The Ultimate Question? Mike Hill takes a look at the potential of the Net Promoter Score® for the health and fitness industry T
he old customer service adage – about a good experience being shared among three friends/colleagues but a bad
one being shared with 10 – is now hopelessly out of date. Put a good recommendation on LinkedIn or a bad one on a review site and not only will it reach 100 times more people within days, but it will stay live for months. So what’s the ultimate question to
ask your customers if you want to understand their relationship with you, as well as the future growth potential and profi tability of your business? And what do Amazon, google, Apple, Travelodge, Virgin and DC Leisure all have in common? These companies, along
with many others across the world, believe the ultimate question is represented by the Net Promoter Score (NPS)®, a customer loyalty metric developed by Fred Reichheld, Bain & Company, and Satmetrix.
asking the question Companies obtain their NPS® by asking customers a single question on a 0 to
68 NPS
10 rating scale: “How likely is it that you would recommend our company to a friend or colleague?” Based on their responses, customers are categorised into one of three groups: Promoters (9-10 rating: loyal enthusiasts who keep buying from a company and urge their friends to do the same), Passives (7-8 rating: satisfi ed but unenthusiastic customers who can be easily wooed by the competition) and Detractors (0-6 rating: unhappy customers trapped in a bad relationship). The percentage of detractors is then subtracted from the percentage of promoters to obtain a Net Promoter Score® – a clear measure of an organisation’s
NPS National Averages 25 Detractors Promoters 0 10 20 30 40 Read Health Club Management online at
healthclubmanagement.co.uk/digital 50 27
performance through the eyes of its customers. A score of 75 per cent or above is considered quite high. Reichheld argues that the main benefit
of the NPS® is that it gives organisations a single customer service objective: creating more ‘promoters’ and fewer
‘detractors’ – a simple concept for employees to understand. When properly used, it can also reduce the complexity of implementation and analysis frequently associated with measures of customer satisfaction, providing a stable measure of business performance that can be compared across business units and even across industries. Created from years of research – hundreds of businesses across many industries – NPS is also proven to be linked to sustainable growth. Indeed, companies that achieve long-term profi table growth have Net Promoter Scores two times higher than the average company, while NPS leaders outgrow
52 60
Initial fitness industry results show an average NPS of just 25 per cent
november/december 2010 © cybertrek 2010
©
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