The beauty of NPS® lies in its simplicity.
For the uninitiated, NPS (or Net Promoter Score) is a popular customer loyalty metric created by Fred Reicheld, Bain & Company and Satmetrix in 2003. NPS is one question that simply asks customers to rate their likelihood to recommend your organisation to a friend or colleague on a scale of 0 to 10.
The creators claim that a company’s Net Promoter Score correlates with revenue growth – companies with high NPS scores tend to grow at more than twice the rate of their competitors.
NPS 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. “How likely would you be to recommend this company to your family and friends?” 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.
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.
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.
Phillips Electronics tracked NPS for a sample of accounts over time and found that where NPS increased, revenue grew by 69%. Where it remained steady, revenue grew only by six percent. And where NPS declined, revenues actually decreased by 24%
As depicted above, PeoplePulse’s NPS surveys can be mobile optimised to enable your customers to give you feedback from anywhere at anytime.
PeoplePulse’s easy to use charting tools enable you to easily compare your NPS scores by State, Year, Division, or indeed any metric of interest to you.
PeoplePulse NPS Surveys – What you receive:
What Makes Us A Great Solution For You?
It’s simple –
At PeoplePulse we combine the very best in online survey software and reporting with your own dedicated Project & Account Manager to build your survey and manage your survey process for you.
This combination of exceptional software and unmatched support & advice works to ensure that your Net Promoter Score survey is set up professionally without fuss, and that ultimately your survey delivers you the insight you need to make better business decisions.
(* Not to mention that to date we’ve helped more than 1,000 other organisations implement first class feedback solutions). We look forward to the opportunity to assist you too.
A sample of our 1,000+ survey clients: