Net Promoter Score – Your Word of Mouth Index
July 06, 2016
Most businesses track their online reviews religiously yet they have no metric to assess an even more important marketing tool; word of mouth. Despite its significance, many small businesses either weren’t aware or found it too difficult to measure this important growth metric.
It’s Not Dificult, Enter Net Promoter Score
Net Promoter Score (NPS), familiar to most Fortune 500 companies, is just such a measure and it is increasingly available to local businesses.
The NPS survey, by design, is crafted to calculate how well you are doing amongst the subsets of your customers most ready and willing to affect your word of mouth marketing.
The NPS survey asks one question; How likely are you to recommend us to a friend or colleague? It then allows the customer to signal how likely their word of mouth potential by rating this question from 0 (not likely) to a 10 (very likely).
The methodology of Net Promoter Score evaluates the 0-10 answers not by a simple average of your over all customer service but rather by looking at the two poles of your customers; those that love you (promoters rating you a 9 or 10) and those that found your service lower than average (detractors rating you a 0-6).
These two groups are the most likely to either encourage or discourage others from frequenting your business.
Essentially the NPS score, calculated by subtracting the detractors from promoters and dividing by the total respondents, is a single number that captures the likelihood that you will have good word of mouth. The scale runs from -100 to +100 and the higher the better. Remember it measures how willing folks are to talk about you and how willing they are to encourage their friends to do business with you thus the index has turned out to correlate well with your future growth.
Word Of Mouth Drives New Business & Your Success
Reviews, since their appearance on the national scene in the early parts of the decade, have certainly increased in importance as form of digital word of mouth.
New customers can learn about your business by reading reviews on Google, Yelp, Facebook and others, but research in 2012 and earlier found that as many as 85% of new customers acquired by small business came via traditional word of mouth.
In my more recent consumer research I found that two and a half times as many folks found their lawyer through asking family, friends or a work colleague than through the next most popular source, the internet search where reviews play a role.
There are certainly indications that younger consumers are increasingly reliant on reviews but word of mouth continues to be the leading way to find new customers.
Humans, being social creatures, will very likely continue to tell those closest to them of their experiences, so word of mouth referrals will continue to be a huge driver of your new customer sales.
The Net Promoter Score creates a single score, by looking at your promoters and detractors, that is effectively a word of mouth index for your business. And given that it correlates well with future sales you should be thinking about NPS as one of the most important metrics for your business. Best of all, we’ll help you start capturing it for your business.