Using Net Promoter Score to Measure Social Media Effectiveness

In our previous post, Social Media – Replacing ROI, we took a first look at replacing ROI as the be-all, end-all metric for social media. In this post, we take a look at Net Promoter Score as a social media metric.

According to netpromoter.com:

Net Promoter® is both a loyalty metric and a discipline for using customer feedback to fuel profitable growth in your business. Developed by Satmetrix, Bain & Company, and Fred Reichheld, the concept was first popularized through Reichheld’s book The Ultimate Question, and has since been embraced by leading companies worldwide as the standard for measuring and improving customer loyalty.

NPS is based on the value of a single customer to an organization. For example, Dell estimates[1] that their average consumer is worth $210 over five years. A Dell detractor costs the company $57, and a promoter generates $328.

NPS divides online contributors into three categories by asking simply: How likely is it that you would recommend [organization] to a friend or colleague? Based on the answers on a 0-to-10 point rating scale, individuals are categorized as:

• Promoters — Score 9-10 — Loyal enthusiasts who will keep buying and refer others
• Passives — Score 7-8 — Satisfied but unenthusiastic people who are vulnerable to competitive offerings
• Detractors — Score 0-6 — Unhappy people who can damage your reputation and growth through negative word-of-mouth

Tracking these groups helps you get a picture of your organization’s reputation and performance through your clients, prospects, and supporters’ eyes.

To calculate your organization’s Net Promoter Score, take the percentage of people who are Promoters and subtract the percentage who are Detractors.

You should know that, like many new social media metrics, Net Promoter remains somewhat contro­versial, with studies denying and confirming its effectiveness. Nonetheless, just by making the effort to measure promoter activity, you will know a lot more about your community, and thus the effort is likely to be worthwhile.

According to Wikipedia: [2]

• General Electric uses NPS to evaluate process excellence for its customers, and plans to use NPS as a metric to decide the compensation of its leaders
• Procter and Gamble uses NPS to measure consumer reactions to its brands
• Allianz uses NPS to maintain what it calls “customer-centricity”
• Verizon Wireless uses NPS in all business channels including their call centers and retail stores

Using Net Promoter Score to Measure Social Media Effectiveness is the 42nd in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at http://bit.ly/OrderBeAPerson and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Using Online Promoter™ Score to Measure Social Media Effectiveness

[2] Wikipedia: bit.ly/bGFS3R