Net Promoter Score® (NPS)
The Net Promoter Score is a simple method of measuring the overall likelihood of a customer to recommend a company to their friend or colleague. It is an indicator to the overall satisfaction of that customer with the company’s product or services.
Measuring and Calculating the Net Promoter Score
The NPS Formula, customers are asked the ultimate question:
What is the likelihood that you would recommend Company X to a friend or colleague?
The answer is measured on a scale from 0 to 10. Then segment results into three categories: Promoters, Passives and Detractors.
The Net Promoter Score is calculated by the percentage of who are promoters subtracted by the percentage of detractors. By doing this, it allows companies to measure the overall performance through its customers’ eyes. High scores on this question correlated strongly with repurchases, referrals and other factors that contribute to a company’s growth.
According to Bain & Company, the developers of the Net Promoter Score: Companies that achieve long-term profitable growth have NPS two times higher than the average company.
The NPS is a simple yet practical way to measure the attitudes and behaviours of customers. Net Promoter surveys can consist of just two to three questions which can easily be done via a number of means. Resonate have used various channels of capturing NPS for their clients, from utilising in store QR codes, over WI-FI connections and many other methods.
Net Promoter Score calculation does not include complex statistical analogy but a single number that can be measured weekly or monthly. Bain & Co discovered through their extensive research that NPS explained roughly 20% & 60% of the variation in organic growth rates among competitors.
Net Promoter System®
The Net Promoter System is a practical framework that is established from top down that incorporates the entire organisation including employees, processes and strategies.
As Bain & Co puts it together, the system starts at the top. From the leadership team to provide strategic priority and vision that are customer focused. Then utilising Net Promoter Score as the key metric to measure and track over time and part of the Net Promoter system to ask an open-ended question for the reason behind the score.
At this point the feedback is broken up in Inner Loop and Outer Loop.
The Inner Loop – by asking open ended “why?” question after asking the NPS question. The feedback contains both quantitative rating and qualitative comment. The feedback is passed onto the affected parties within the organisation to action and close the loop. The inner loops gives the affected parties a chance to learn and implement changes on their own with supervisor involvement when necessary.
The Outter Loop – at times when the feedback action exceeds the ability of the frontline and individuals. It means digging deeper to the root cause of the issue and identifying the processes and procedures that affected this. Taking in data from the inner loop, combining that with operational data sets, frontline feedback and marketplace insights to understand the impact and prioritise the transformation.
In between it is best to have a consistent open communication between the frontline and head office. Maintain weekly discussions to build commitment, give and receive help and open escalation path for serious issues. Ensure each member is prepared before the meeting and encourage participation from every member of the group to ensure maximum effectiveness.
Keep employees engaged and realise their contribution at the frontline directly impact customer experience. When hiring, find those with high Emotional Quotient (EQ), not just high Intelligence Quotient (IQ). Continuous training and introducing new concepts to employees. Reward and continued recognition of their efforts to ensure it is not diluted.
Net Promoter® and NPS® are registered trademarks and Net Promoter Score and Net Promoter System are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld.