Don't rely on NPS alone! Here's what truly proves customer loyalty

In the last three years, I've done a lot of research and had loads of conversations with executives around customer loyalty. We've found a way to earn loyalty without manipulating customers or offering discounts upon discounts. But one puzzle has been hard to solve. I wanted business leaders to be able to tell how much revenue is coming into their business because customers are loyal. 

How do you really track that?

That question sat with me for a long time, until I had a conversation with Benn Colton. He introduced me to earned growth, and that was the start of a more rounded approach to earning customer loyalty.

As I started looking into this earned growth concept, it turned out that it was developed by Fred Reichheld, the same person who built NPS (the Net Promoter Score).

Earned Growth Rate (EGR) is a metric that measures how much of a business's revenue growth comes from retained and referred customers, rather than paid acquisition.

Why I say you shouldn’t rely on NPS alone 

NPS gives you a forecast. It tells you how likely customers are to recommend your brand. But the earned growth rate (EGR) takes it further. Instead of telling you the likelihood that a customer will recommend your business, it tells you two key things directly:

1. Exactly how much of your revenue each year comes from customers you've retained (you can track this on any timeline, let's use annually for now).

2. What percentage of that same year's revenue came from new customers who were referred or recommended to your business by the customers you already had.

Let’s break down the difference 

1. It measures outcomes instead of intentions

NPS tells you what customers say they'll do (recommend you). EGR tells you what they actually did. Sentiment is useful, but revenue is proof. 

2. It puts a dollar figure on loyalty efforts 

This is huge for executives and finance teams. Saying, "Our NPS is 72" doesn't mean much to a CFO (Chief Financial Officer). How about saying, "38% of our annual revenue came from retained and referred customers"? Isn't that a number finance can act on, budget around, and defend in a board meeting? 

3. It closes the gap between CX and revenue 

One of the biggest struggles CX (customer experience) and loyalty teams have is proving their work matters to the bottom line. EGR gives them a direct, revenue-based way to say: "Here's what our loyalty efforts are actually worth to this business financially." 

Here's how to track your EGR in 3 steps 

First, you need to know your net revenue retention rate and your earned new customers rate.

Net revenue retention rate (NRR): this is how much of your revenue this year came from customers you already had before.

Earned new customers rate (ENCR): how much of your revenue came from referrals or word of mouth (not paid marketing).

Something important for you 

Your earned growth rate is a signal, one that points you toward more intentional, sustainable financial growth and genuine care for your customers.

If it's low, look inward. Refine your culture, review your employee touchpoints, and remove the frictions blocking their progress. Assess the mental models shaping decisions and behavior in your organization, and correct where needed. Review your customer journey too, and find better ways to show your customers that you care. A happy and supportive customer base is one of the assets that yields quality and sustainable growth.

Most importantly, do not simply fixate on increasing your EGR. Rather, focus more on operating your business in a way that makes earned growth an inseparable outcome.

Let's talk

If this topic resonates with you and you'd like to talk more about it, shoot me an email so we can schedule a time to chat.

When you reach out, let me know which of these you're looking for:

• An open conversation about the topic itself. No strategy or brand talk required, just an open discussion

• A conversation about your brand or business specifically

• Hands-on consulting or support: working together to realign things internally for your business

I welcome all three, and I'm happy to have these conversations with executives, team members, and team leads. Just let me know upfront which one you're after, so we can make the most of our time together.