Net Promoter Score—80!!!

Today I had business breakfast with five leaders of exciting multi-billion dollar company (we’ll call them Sugar Corp) that prides itself on great customer experience. Sugar’s execs explained to us that their firm used a system called Net Promoter Score (NP Score) to measure customer engagement. They said this measurement was so important to Sugar that a portion of their compensation was tied to it. That shows the company is really serious about pleasing customers! Net Promoter Score is a system created by the world’s foremost expert on loyalty, Fred Reichheld of Bain and Co.

Rackspace has followed Reichheld’s teachings since our inception and today uses the Net Promoter Score. But, our score is 40….and Sugar Corp’s score is 80! That score is truly world class since the rating has a range frome negative 100 to positive 200. Actually, 40 is amazingly good and we at Rackspace are very proud of it.

Promoters are people who rave about your company. Detractors bad mouth you. A NET Promoter is the difference between these two. A 40 means that Rackspace has an army of “promoters” in the marketplace singing our praises. And, these promoters out-number detractors by a good margin. Promoters act as Rackspace’s sales force…for free. They drive down marketing costs and push profits higher. Creating promoters are the key to every business.

How the NP Score is measured:

Over the many years Rackspace has been measuring its NP Score I have never met a leader whose firm had a higher score than Rackspace. Our score of 40 is darn good and reflects a ton of engagement from our customers out in the maketplace. Our commitment to Fanatical Support has created customer-promoters who have propelled Rackspace to be the world leader in hostng #1 over the past decade to over 2500 Rackers (employees) and revenues over $500m.

I am proud of the trust we have created with our customers, ….but a score of 80 makes my mind go crazy. I wonder where Rackspace would be if we had a score of 80! Would our customer referral rate be twice as high? Would our profit be twice as large? Would we be twice as successful?

As I listened to Sugar’s leaders, I knew that Rackspce would be an much better company with a score of 80….We would be a greater company. When a company commits to greatness, customers know it. Those customers bring more of their business and they tell their friends. Its that simple. There are so very few companies that truly commit to greatness because it it so hard. And, its so easy to settle for “average”.

9 thoughts on “Net Promoter Score—80!!!”

  1. Graham,

    You are right–a Net Promoter Score of 80% is world-class. The best way to grow is to turn your customers into
    salespeople (or “promoters”). An NPS of 80 means that any army of customer salespeople (at no expense to the firm) is
    out there growing your business–so you can concentrate all of your resources on serving customers exceptionally well.
    At 40% NPS, Rackspace is outstanding. But if you could achieve 80%, San Antonio would soon become a much larger city!

    One small correction for your blog…a perfect NPS would be 100%, which means that every customer you touch becomes a
    promoter. That would be Fanatical.

    1. Thank you for your comments and corrections, Fred. Its amazing how much sense your ideas are and yet the world fights them at every turn. Its amazingly hard to keep focused on serving customers well vs cutting costs. There must be an innate human desire to cut and not build. My guess its due to risk. Investment in creataing MORE value for customers is risky since it may not result in a corresponding benefit. This leads businesses toward undifferentiated commodity-land year after year. On the other hand, things that are easy seldom create sustainable competitive advantage. So, the difficulty of having a NP Score of 80 makes it virtually impossible for a lesser company to ever catch up.

  2. ….but a score of 80 makes my mind go crazy. I wonder where Rackspace would be if we had a score of 80! Would our customer referral rate be twice as high? Would our profit be twice as large? Would we be twice as successful?

    Basic physics would tend to indicate”no” to your question, but it is possible…i would estimate that it would take about three parts more of input to gain an additional one part output. Happpens in refrigeration, it’s one of the basic laws, Basically stated and minus the abstract formulas… you need 3 horsepower to accomplish 1hp worth of energy transfer. generally this would work in all fields.( The three laws of thermodynamics). regards, and you should check out
    http://www.thework.com.
    H

  3. Graham,
    Hello. Long time, no talk. If you recall, I was the analyst at JMP Securities when Rackspace went public. I happened to come across your blog as I was doing a search on net promoter scores. I had no idea Rackspace was implementing this system.

    My wife owns a dry cleaning franchise and she just implemented Net Promoter System to survey her customers. She’s using Systino – very interesting SAAS-based software that allows organizations to implement Net Promoter Scores. She has a 80% right now!! But we just started so not sure if we’re just benefitting from fewer data points. I’ll keep you updated..:)

    Hope all is well and the team at Rackspace is also doing well.

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