You might get satisfaction . . . but can you get true loyalty?

Traditional surveys ask customers how satisfied they are with the company.  We all know that it isn’t easy to keep customers satisfied!  But now there is an even higher aspiration that leading companies are striving for: Customer Loyalty.  And the Net Promoter Score, or NPS, is the best way to measure Customer Loyalty.

Here’s how it works. Imagine a company asks 10 people the following question: How likely is it that you would recommend our company to a friend or colleague? Customers are asked to answer that question using a 0-10 rating scale, which sounds easy enough – but unlike other customer satisfaction surveys, scoring highly according to the rules of NPS is tough work!

Whereas most satisfaction surveys would consider a rating of 7 or higher as satisfied, under the customer loyalty framework, you actually need a 9 or 10 to be counted as promoters.  Not only that, any score 6 or less counts as a detractor, and will cancel out a positive 9 or 10!  So you can see that if you get too many scores of 6 or less, it’s actually possible to get a negative NPS – and that’s unfortunately all too common.

Check out our example below to see what we mean:

10 customers participate in a satisfaction survey for Smartsalary.

In the above example, the satisfaction score is 90%, but the NPS is only 50%!  We like the fact that it is a harder mark.  We have used Net Promoter Score (NPS) because we would much rather have people say good things about the business – that is, promote the business – rather than just be passively satisfied.

We’ve only just begun the NPS journey, but with your help and continuous feedback, we hope to keep improving and serving you better and better!


p.s. Incidentally, in a recent blog post, we featured Zappos, an online shoe retailer.  They have an NPS of greater than 80% . . . one of the highest ever measured.  Smartsalary’s NPS is currently sitting in the 40’s, certainly one of the highest in Australia!  We’ve just begun, so will be interesting to see how we go!

Deven Billimoria
Chief Executive Officer

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September 2010
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