NET PROMOTER SCORE (NPS)
“Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you.”
– Chip Bell, Service Guru
The answer to one simple question is among the best indicators of the future growth of a business, and that one question is,
“How likely are you to recommend our company/product/service to your friends and colleagues?”
Your customers’ answer to this question, based on a 10-point scale, can be compiled to create a net promoter score (NPS), which is simply taking the percentage of customers that answer 9 or 10 and subtracting the percentage of customers that answer 0 to 6. Customers that answer 9 or 10, or Extremely Likely, are labeled promoters, 7 or 8 are called passives, and 0 to 6 are termed detractors. Promoters typically put their reputation on the line and tell their friends and colleagues to use a company, product, or service, while detractors go out of their way to tell their friends and colleagues about their poor experience and not to use a company, product, or service.
Back in 2003, Fred Reichheld, who was a partner at Bain, introduced the net promoter score. He and his team conducted a significant amount of analysis and determined an industry’s NPS leader outgrew the competition by double. It makes sense on many levels. First, NPS is a great proxy for the strength of relationships between a company and its customers. Those companies with a high NPS score have a lot more Promoters than Detractors, which drives both loyalty and word of mouth. If you can drive high loyalty and high word of mouth, then you are not only doing a lot of things right, but you are keeping your existing customers and driving down your new customer acquisition costs.
Many successful companies use net promoter as one of their primary customer metrics, including Apple, Zappos, Southwest, Procter & Gamble, Johnson & Johnson, and American Express, to name a few. Here are some examples of net promoter scores.
What are some of the Best Practices for Net Promoter implementation?
NPS is one of the simpler and more effective customer satisfaction methodologies. So, let’s go over some of the best practices.
Keep it Simple, but add a Few More Questions
Typically, companies ask customers the net promoter question through phone calls, real-time in-person interactions, or online surveys. When creating a net promoter survey, also ask demographic, experience, and other contextual questions. It can be insightful to understand how net promoter scores differ between males and females, different age and income levels, ethnicity, and other demographic considerations. Furthermore, you want to understand what drives net promoter scores both good and bad, so typically you want to also include a few questions on the different dimensions of the products and services. And, my personal favorite is including open-ended questions on the survey, such as “Please tell us why you are not likely to recommend our product?”
Create a System of Feedback Loops
Stuck in customer support systems and surveys is often a ton of important and actionable information. Typically, customer support exists because there are issues with the products and services of a brand. Negative and positive customer feedback doesn’t belong trapped in some database, but in the hands of product developers, the people that deliver customer service, and the operators of a business. Net promoter scores and data, especially of the detractors need feedback loops back into the business, so hopefully, those detractors can be better understood, contacted, and made into potential promoters. At Sports Authority, every store had access to their customer surveys and promptly addressed customer complaints and issues. At Goal Zero, we organized customer support data and fed issues back to the product development and operations teams.
Tie the Data to Transactions
One of the most powerful ways to bring to life customer survey data is to tie it back to transactional data. You can see actionable patterns and behavior pop when you tie net promoter data to historical customer transaction data. And, it helps prove to employees the importance of net promoter.
If you have different product families, locations, stores, teams, etc., disaggregate the NPS data to make it more actionable. The data can illuminate the strengths and weaknesses of the customer value proposition & journey.