January 10, 2024
NET PROMOTER SCORE
by John V. Purrington, CFP®
Frederick Reichheld, in 2003, published a groundbreaking study on Loyalty in the Harvard Business Review. He identified a simple question to quickly and accurately measure the loyalty of a company’s customers. I am sure you have seen it. “How likely are you to recommend company X to a friend or colleague?” It is known as the ‘Net Promoter Score’ or NPS and it is now widely used.
I discovered the NPS soon after it was introduced and became an immediate fan. I remain a fan because it is a simple, but powerful way to measure the alignment of our services with our mission.
Armor’s mission is: “To make a positive impact on our community by providing objective advice, proactive financial planning, and goal-based investment management to a growing number of clients, thereby reducing their financial stress, simplifying their complex financial lives, and helping them turn goals into realities.”
We are passionate about achieving our mission. When clients rate us highly on the ‘how likely are you to recommend’ question we have succeeded.
Since 2010, Armor has surveyed clients every two or three years. In 2023, we worked with an independent, third-party consultant, Absolute Engagement, to help us gather feedback on how we’re doing, as well as to understand how we may need to evolve our clients’ experience to not only meet but exceed their expectations today and into the future. This is the first year where we have been able to include the Net Promoter Score question. Strange as it may seem, this is the stuff that gets me excited.
The NPS question is scored on a scale of 1-10. Ratings of 9 and 10 are ‘promoters’, 7 and 8 are ‘passives’, and ratings of 6 and below are ‘detractors’. The score is calculated by subtracting the percent of detractor responses from the percent of promoter responses.
Bain & Company (Reichheld’s employer and the creators of NPS) note that a good NPS score is 0 and above. Above 50 is excellent and above 80 is world-class. For context, the average NPS in the banking industry is 34 and among firms similar to ours the average is 48.
We are ecstatic to report that Armor’s NPS score was 86. We had no ‘detractors’ and 97% of our respondents scored us 8 or above. There are always areas where we can improve, but these results demonstrate that we are doing a world-class job for our clients. Don’t keep us a secret.
A couple of other data points from the survey also stood out to me.
37% of our respondents have referred a friend or colleague who will benefit from our services in the last 12 months. (This represents an increase from 33% in 2021.)
100 percent of our respondents are satisfied with the relationship with their advisory team at Armor, 92% are Very Satisfied. This is our highest reading from our six previous surveys.
One component of our Mission is reducing stress for our clients. 69% of our respondents agreed with the statement “I/we feel less stress when it comes to our financial future” (This is an improvement from 54% in 2021).
Thank you to all of our clients who participated in the survey in 2023. We will continue to pursue our mission and hope to see even better scores on our next survey.
The NPS score is based on unique experiences from current clients and are not representative of all clients experiences with the firm. Survey responses were solicited, no cash or non-cash compensation was provided.