The Net Promoter Score and the Financial Services Industry.

The NetPromoter Score (NPS) was first espoused by Fred Reichheld – a Bain & Company Fellow and Founder of Bain’s Loyalty practice. It basically says that the key question to ask of any client is “Will you promote our product?”. Since both the real world and and social networks can quickly carry both positive and negative comments, the NPS balances all that out by subtracting the bad from the good. Below is a definition of how all of this works from a site called – fittingly – Net Promoter.

• Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
• Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
• Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

To calculate your company’s Net Promoter Score (NPS), take the percentage of customers who are Promoters and subtract the percentage who are Detractors.

There is an expensive report from the Net Promoter people that gives the NPS values of companies within several industry segments. However, just the short summary of these reports provides some interesting insights.

In the Financial Services industry, they reported that over the last year – understandably – the average NPS of the banking sector had dipped…down  to 15%.  USAA was at the top of the heap, with Citigroup at the bottom. In the credit card sector, American Express, Discover and USAA were at the top. For retail brokerage firms, Charles Schwab lead with an NPS of 36% and Merrill was in last place.

But how the financial services industry stacks up against other industries tells a bigger story. Google had an NPS of 71%, Amazon had an NPS of 74% and Apple had an impressive 77%. Clearly there is room for improvement. The one industry that was in considerably worse shape was the local and long distance telecommunications carrier industry. Their NPS was a NEGATIVE 7 %

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