What this publication covers
Questions the isolated and weakly audited use of Net Promoter Score and introduces earned growth rate as a complementary metric. The proposal distinguishes revenue from repeat customers and referrals from revenue generated by advertising, promotions, or sales, connecting loyalty to verifiable financial outcomes.
How this reference can help
Build an initial understanding of key debates about métricas, avaliação e interpretação de resultados.
Curated by Ricardo Martins
View the original abstract 🇺🇸 🇬🇧
Since its introduction, in 2003, the Net Promoter System, which measures how consistently brands turn customers into advocates, has become the predominant customer success framework. But as its popularity grew, NPS started to be gamed and misused in ways that hurt its credibility. Unaudited, self-reported Net Promoter Scores undermined the usefulness of NPS. Over time its creator, Fred Reichheld, realized that the only way to correct this problem was to introduce a hard, complementary metric that drew on accounting results. In this article he and two colleagues from Bain introduce that metric: the earned growth rate, which captures the revenue growth generated by returning customers and their referrals. To calculate their earned growth rates, firms must have systems that gather data on the costs and revenues for each customer over time and must ask all new customers why they came on board. If the reason is a referral or recommendation, a customer is “earned”; if it’s advertising, a promotional deal, or a persuasive salesperson, the customer is “bought. ” Earned growth rates reveal the real-world impact of customer loyalty. Because they’re auditable, they can help firms validate investments in customer service and convince investors of their businesses’s underlying strength. On a scale from 0 to 10, how likely would you be to recom- mend our company to a friend? Net Promoter 3.0 by Fred Reichheld, Darci Darnell and Maureen Burns From the Harvard Business Review (November – December 2021) UNDERSTANDING THE REAL VALUE OF HAPPY CUSTOMERS SCAD SERVICE DESIGN moter Score, you subtract the percentage of your customers who are detractors from the percentage who are promoters. While that arithmetic might seem simplistic, the full system is intended to inspire teams to deliver...