Customer Service Solutions
Net Promoter Score (NPS) programs ask just one quantitative question: "How likely are you to recommend this business to a friend or colleague?" Tap into the collective knowledge of our CX Specialists and find out how to improve your business' NPS.
Net Promoter Score Definition
The Net Promoter Score (NPS) is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company's products or services to others.
It is used as a proxy for guaging the customer's overall satisfaction with a company's product or service and the customer's loyalty to the brand.
Net Promoter Score Calculation
Customers are surveyed on one single question. They are asked to rate on an 11-point scale the liklihood of recommending the company or brand to a friend or colleague."On a scale of 0 to 10, how likely are you to recommend this company's product or service to a friend or a colleague?"
Based on their rating, customers are then classified into 3 categories: detractors, passives and promoters.
'Detractors' gave a score lower than or equal to 6. They are not particularly thrilled by the product or the service. It is unlikely that they will purchase again from the company and couple potentially damage the company's reputation through negative word-of-mouth.
'Passives' gave a score of 7 or 8. They are somewhat satisfied but could easily switch to a competitor's offering if given the opportunity. They probably wouldn't spread any negative word-of-mouth, but they are not enthusiastic enough about your products or services to actually promote them.
'Promoters' answered 9 or 10. They love the company's products and services. They are the repeat buyers, and the enthusiastic evangelist who recommends the company products and services to other potential buyers.
Calculating The Score
The Net Promoter Score is determined by subtracting the percentage of customers who are detractors from the percentage who are promoters.
This generates a score between -100 and 100. At one end of the spectrum, if all customers surveyed gave a score lower than or equal to 6, then the score would be -100. On the other end of the spectrum, if all of the customers were answering the question with a 9 or a 10 then the total NPS would be 100.
How To Read A Net Promoter Score
The basic construct of a Net Promoter Score is easy to understand, hence its popularity and widespread usage. If a company has more detractors than promoters, the score will be negative, and the inverse is also true.
A Net Promoter Score provides companies with a simple and straightforward metric that can be shared with their front line employees. It is helpful in that is can be used as motivation for employees to improve and to provide the best possible customer experience. The ultimate objective, of course, is to convert customers who were less happy or unimpressed into promoters who will put the word out and drive increased revenues and profits.
A higher NPS tends to indicate a healthier business, while a lower NPS can be an early warning to dig deeper into potential customer satisfaction and loyalty issues.
Net Promoter Scores often average quite low. Fred Reichheld, in his calculation of 400 companies across 28 industries back in 2003 (HBR article "The one number you need to grow"), found that the median Net Promoter Score was just 16.
How Do You Make NPS Work For Your Business?
Calculating an organisation's Net Promoter Score every once in a while is not enough in itself to bring about any longstanding value. It needs to be part of a broader ecosystem whereby the entire organisation lives and breathes by it.
First off, without senior leader sponsorship and a strong committment to improving the customer experience, it will be difficult for any one part of the company, be it marketing, sales, operations, customer service or even the customer experience team to get the necessary cross-functional adoption and accountability for the program. It needs to be a company wide effort, driven from the top down.
Secondly, the NPS eco-system needs to have a closed loop. Frontline employees need to be able to act upon real-time feedback and from insights provided by customers and the rest of the organisation. Whether it is sales, operations, or marketing, all should be able to learn and improve from the utilisation of the information obtained.
And finally, the data needs to be properly analyised. The power of the Net Promoter Score lies in its simplicity but unless a business dissect the data and figures out the root causes of its detractors' experiences or the factors of the success that turned simple customers into promoters, it will miss out on a recipe for future growth, profitability and sustainability.
For example, one is well served by reading all of the comments, tagging them, classifying them and then looking for patterns. It is paramount for a company's leadership to seek our the 'why' behind the data and to adapt and evolve accordingly.