What is Net Promoter Score (NPS)? And How To Implement It
What is NPS?
Net Promoter Score is a customer loyalty metric created by Fred Reicheld, Bain & Company and Satmetrix in 2003. It is based on the perspective that every company’s customers can be placed within three types.
“Promoter” customers are enthusiastic and loyal, who continually buy from the company and ‘promote’ the company to their friends and family.
“Passive” customers are happy but can easily be tempted to leave by an attractive competitor deal. Passive customers may become promoters if you improve your product, service or customer experience.
Finally, “Detractor” customers are unhappy, feel mistreated and their experience is going to reduce the amount of which they purchase from you.
Detractor customers also have an increased likelihood of switching to a competitor as well as warning potential customers to stay away from your company.
In a nutshell, customers who give you a rating of 9 or 10 on a scale of 0 to 10 are considered Promoters. Customers who give you as rating of 7 or 8 are passive customers and whilst they are not dissatisfied, they do not factor into the NPS score. Lastly, any customers who provide you a rating of 6 or lower are considered your detractors.
Your Net Promoter Score is calculated by subtracting the percentage of detractors from promoters to get an overall NPS result. Your Net Promoter Score can range anywhere from -100 to 100 and is always displayed as an integer.
To begin to determine and understand your Net Promoter Score, the ultimate NPS question must be asked to your customers:
“On a scale of zero-to-ten, how likely is it that you would recommend us (or this product/service/brand) to a friend or colleague?”
Respondents are asked to answer by using a 0 to 10 scale, where 5 is neutral. It is not only about asking for just a number and ending your survey. It is important to understand why each customer gave you their particular score as this will provide you with actionable items which can be targeted for effective process improvement or corrective action. This will also help you identify what your core strengths and competencies are.
NB: A free text follow up question “What is the primary reason for your score?” should always follow the NPS question.
Making the right improvements based on the feedback of your customers can help turn passive and detractor customers into promoters and increase customer loyalty and profitable growth.NPS explained roughly 20% to 60% of the variation in organic growth rates among competitors. Click To Tweet
The Four Key Steps to Effective Implementation of NPS:
Step 1: Identify your customer ‘contact’ points.
Understanding the contact or touch points and how they impact your customer and their experience is the first stage of your NPS system. These customer contact / touch points need to be considered regardless of whether the survey is ‘transactional’ or ‘relationship’ focused.
Step 2: Develop your NPS system.
It is important to determine the links between your NPS survey questions and your company Key Performance Indicators (KPI’s). Consideration also needs to be made about the type of NPS survey that is conducted – transactional or relationship focused, sampling methods as well as the data collection method – online or telephone.
Step 3: Understand the drivers of customer loyalty.
In order to make improvements, it is vital to understand what is influencing the behaviours and feelings of your detractor, passive and promoter customers who are providing feedback based on their individual customer experiences. It may be necessary to conduct post-survey follow-up to clarify feedback provided to effectively gain greater insight and strengthen the customer relationship.
Step 4: Create a closed loop system.
Front-line, middle management and senior management is required to have an effective closed loop system. Front-line staff such as customer service, technical support and sales play a key role in developing promoters and neutralising detractors. Middle managers provide performance coaching and know how to manage excellent customer experiences. Senior managers help create and provide appropriate systems for recognition, communication and ensure the NPS results remain in line with strategy deployment.
The inclusion of such questions can dramatically increase the value you receive from running your customer satisfaction process.
Ready to Find Out More?
The PeoplePulse™ Net Promoter Score survey solution is an excellent option for organisations wanting to establish a sound customer satisfaction assessment process, receive actionable data, and receive maximum return on investment.
Our net promoter survey solution is unique in that it combines:
Unrivalled survey software that delivers feature-rich, actionable reporting data available online 24 x 7.
The appointment of an expert survey Project Manager to your account to provide advice and hold your hand throughout the customer satisfaction survey set up, invite and reporting process.
A proven net promoter score survey solution that can be easily customised and is suitable for organisations of all sizes.
The Proof Is In Our Client Base:
Our primary focus is in the Australian and New Zealand markets. We have over 1000 corporate and Government clients of all sizes, from smaller 10 person firms to organisations with 25,000+ employees. A small sample of our survey clients include:
- Virgin Mobile
- IAG Insurance
- Australian Bureau of Statistics
- Guardian Trust
… And many many more!
Our own customer’s feedback is our strongest endorsement:
The PeoplePulse technology made our surveys easy, quick and affordable. I have been highly impressed with your survey software – thanks again for the fantastic service you have provided.
– Ms Fleur Edwards
What a pleasure it has been to work with your system and your team. Issues are always politely and speedily dealt with and nothing is ever a hassle.
– Ms Natalie McCormack
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At PeoplePulse, we combine exceptional net promoter score survey software with unmatched support and advice. Request a demonstration of our net promoter survey today by entering your contact details in the form below.
Alternatively, phone us on: +61 2 9232 0172. We look forward to assisting you.
Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.