What’s Your Net Promoter Score (NPS)?

Posted on September 16th, 2008 in Business Administration by Trevor Reid  Tagged ,

The Net Promoter Score or NPS is a particular statistic that some researchers propose can predict whether overall customer loyalty will encourage your business to grow or not. The main idea of NPS is alluringly simple. Take the percentage of customers who are highly likely to recommend you (promoters), subtract those who are disinclined, indifferent, or only somewhat likely to give you good word of mouth (detractors). There you have it: %P - %D = NPS. The prediction is that a higher score allows for better top-line growth.

NPS has been adopted by some large companies including GE and American Express. Smaller firms may be drawn to its low cost and simplicity. It can be adapted to personal networking and even dating. As a way of measuring customer loyalty the NPS falls within the broad realm of marketing and more specifically into the discipline of relationship marketing. Relationship marketers take the view that continual customer satisfaction is more important than the upside or downside of any single transaction.

This makes a lot of common sense and the underlying theory may be strong too. The research behind NPS was first presented by Fred Reichheld in a 2003 ‘Harvard Business Review’ article. He later expanded on the concept in his book ‘The Ultimate Question: Driving Good Profits and True Growth’. On the other hand, some market researchers claim that the correlation between growth and NPS does not hold up over the long run. Also certain markets, like business-to-business service buyers or senior technology executives, seem to respond more accurately when adjustments are made to the basic approach.

In any case, adherents of NPS find that it is a useful indicator and focal point for customer loyalty efforts because it is easier to grasp than the statistical intricacies of other models. An NPS survey is inexpensive and appealing because it asks one straight forward question such as “how likely are you to recommend our work to a friend or colleague?” A short survey like this is quick to tabulate and probably gets a better response rate than lengthy customer satisfaction questionnaires

As Reichheld described in the preface to his book: “The real issue is how a company knows what its customers are feeling and how it can establish accountability for the customer experience. Traditional satisfaction surveys just aren’t up to this job. They ask too many questions and generate too little usable information.” In contrast, the Net Promoter Score is about one question that generates information you can use as soon as you hear the answer.

For further reading:

Keiningham, T.L., Cooil B., Andreassen T. W., & Aksoy, L. (2007). A longitudinal examination of net promoter and firm revenue growth,” Journal of Marketing, vol. 71, no. 3 (July), 39-51.

Reichheld, F. (2003, December). The one number you need to grow. Harvard Business Review, 81(12), 46-54.

Reichheld, F. (2006). The ultimate question : Driving good profits and true growth. Boston: Harvard Business School Press.

How Not to Buy Textbooks: A lesson in scrounging

Posted on September 1st, 2008 in Misc. by Trevor Reid

To begin, let me send a warm thank you out to my anonymous benefactor(s). The neighborhood law student(s), one year or so ahead of me in school, who generously pitch nearly new casebooks, hornbooks, and study aides into the donation bin of my local public library. The library usually offers donated books that don’t fit in  its own collection on the used book shelf. They ask for a donation of 50 cents for a paperback, $1 to $2 for a hard cover or multimedia. I always drop $2 per book in the coin box whatever the tag says.

Once or twice a semester I ask a volunteer in charge of sorting donations to check the back room for any big red or green tomes that haven’t made their way out front. The stack librarians and volunteers love my backroom raids because the volumes take up so much of their work space. Usually I walk away with at least one extra casebook this way. Although, the only yield of my last sortie was the hardcover of Harry Potter and the Half Blood Prince that I needed to complete my set.

So, if I say I am committed scrounger you will agree. If you’ve watched the scene in 300 where the young Spartan is sent into the wild to fend for himself—-cold, nearly naked and half starving so that he will build the courage and character to lead similarly hardened men to their bitter demise in the name of liberty and glory—-well then, you have some notion of what attending law school on financial aid does to a man.

Here are some tips for stretching any textbook budget.

Tip 1. Get your book list as soon as possible. Ideally, find out what books you need for the next term well before the end of your current classes. This gives you time to shop around, find friends-of-friends who already took the course, and get ILL (see Tip 4 below). If the official book list isn’t available as early as you need, just go ask the professor, the department chair, or a cohort.

Tip 2. ISBN’s are your friends. You do not really know what book you need until you have the ISBN from a reliable source, preferably the professor or off the back of the edition being sold in your college’s textbook cartel bookstore. Having an ISBN makes ILL easier and helps prevent the expense of obtaining the wrong book, or worse a useless edition of the right book. Once you’re certain of the ISBN chuck the title,  publisher data, and learned author’s name. They exist only to deceive you.

Tip 3. Get to know someone who is on the faculty or senior staff of a university and has a library card. It does not need to be the institution you attend. But if you are a teaching assistant, faculty member or other mid to high level employee of a college do stop by and get your own card. Professors and staff often have special library privileges, like checking out circulating materials one academic year at time unless another patron calls for the item. When I was a university staffer, even my egregious late fees were routinely waived as a professional courtesy.

Tip 4. Unlock the power of inter-library loan. This is actually one of the best book scrounging tips ever, and it’s not just for textbooks. If you belong to one college or public library, then you pretty much belong to all of them! Every regular edition book is available in some library or another. This is important because if your college library has the texts for current courses they will probably be on reserve or checked out when you need them. But, at some other college they are just another circulating reference.

Tip 5. Be nice to librarians. Befriend librarians. Seduce librarians.  The time spent searching for any tangible thing in the known universe is inversely related to the quantity of librarians the searcher can comfortably call at 2:00am.