Net Promoter® Score (NPS®) is one of the most popular CX metrics, so we are often asked to discuss it with clients. In addition to helping build successful NPS systems, we often provide a basic overview for executive teams and broader audiences of employees. That’s why created this video. It’s meant to explain what NPS is all about and why it may be a valuable approach for some companies. It’s a great video to share across your organization if you are using or considering using NPS. If you’d like more information, check out our NPS/VoC program resources.
This video is a great introduction to a discussion with your team. That’s why we’ve created a CX Sparks guide that you can download and use to lead a stimulating discussion.
You may have heard of Net Promoter Score, which is often referred to as NPS. It’s a popular customer experience metric. Let’s examine what it is.
Walt Disney once said “Do what you do so well that they want to see it again and bring their friends.” He understood the incredible value of customers who actively recommend a company.
NPS is a measurement system that helps companies track and increase the likelihood of customers recommending an organization.
First of all, let’s describe the actual NPS measurement. It begins by asking customers a simple question:
“How likely are you to recommend this company to a friend or relative?”
Customers choose a response from an 11-point scale that goes from 0 “not at all likely” to 10 “extremely likely.”
Based on their response, customers are placed into one of three categories:
- If they choose between 0 and 6, then they are DETRACTORS.
- If they choose 7 or 8, then they are PASSIVES.
- If they choose 9 or 10, then they are PROMOTERS.
NPS is calculated by taking the percentage of Promoters and subtracting the percentage of Detractors. You then multiply the percentage by 100 to get a whole number between -100 and +100.
Let’s say that 100 people answered the question, and 40 are Promoters, 50 are Passives, and 10 are Detractors. To calculate NPS, we would take the 40% for Promoters, subtract the 10% for Detractors, which leaves 30%. After multiplying it by 100, the NPS is 30.
While NPS provides a score, 30 in this case, the power of the system does not come from overly focusing on the number.
The goal of using NPS is to find and correct issues that create Detractors and to find and repeat activities that create Promoters. So it is important to understand what is causing customers to choose their responses.
That’s why most NPS programs include a follow-up question that asks the customer why they chose the score that they did. This question should be open-ended, not multiple choice, so customers can express their views in their own words.
What do you do with the data?
First of all, you want to “close the loop” with the customers who responded. This means contacting at least some of the customers who respond. Companies often try to reach out to all of the Detractors, to find out more about their problems and to see if their issues can be resolved. They also often contact Promoters, to thank them and hear more about what they like.
Next, you want to examine the opportunities to improve NPS by looking at what situations and activities cause Promoters and Detractors. This requires analyzing the responses from each group separately, and often involves incorporating other information about customers. You may also want to examine what drives Promoters and Detractors across different business areas or customer segments.
There’s no value in identifying the items that are driving NPS up or down unless a company does something with what they learn.
That’s why companies establish processes for reviewing, prioritizing, and taking action on the items that they uncover. In other words, the way to improve NPS is to have an ongoing approach for improving customer experience.
When used correctly, NPS helps companies follow Disney’s advice and do what they do so well that their customers want to see them again and bring their friends.
If being customer-centric matters to your organization, then why leave it to chance? Contact Temkin Group, the customer experience experts, by emailing email@example.com, or visit our website, at TemkinGroup.com.
Note: Net Promoter, Net Promoter Score, and NPS are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.