Many companies I work with know and monitor their Net Promoter Score, NPS, but far fewer use it as the constructive tool it was meant to be. Frequently I see it mixed in with a slew of other metrics being used as yardsticks with no actionable plans. Or worse, I find it’s become a scare tactic aimed at frontline staff: get it together or get out.
For those who are not familiar with NPS, it’s achieved by asking your customers one simple question – How likely is it that you would recommend our brand/product/service to a friend or colleague? The metric is rated on a 0 to 10 scale with 0 being very unlikely and 10 being extremely likely. Yes, it really is that simple, but if you want to achieve something useful with it you should follow up with one more question: Can you tell us why you gave us that score? Before I digress, let’s start off with a little history.
In 2003 we were introduced to NPS by Fred Reichheld who published an article in the Harvard Business Review titled, “The One Number You Need to Grow.” Reichheld revealed research which led to what he stated was the discovery of the most useful metric for gauging customer loyalty, and it came from one question – “How likely is it that you would recommend [company X] to a friend or colleague?” He then assigned a scoring system to the responses of 0 to 10:
- The worst score you could receive is -100, for example, if everyone gave you a 0, that means 100% of people are against you.
- The highest score you could receive is 100 if everyone gave a 10 response: 100% of people are with you.
Hence the Net Promoter Score was born.
The survey has become one of the most popular loyalty surveys in use and hundreds of Fortune 500 companies including GE, Apple, and Intuit value what it says highly. There are of course critics who say NPS is a poor judge of customer loyalty and is not any better than any other loyalty related survey out there. None the less, the simplicity is a wonderful selling point and with so many successful companies like Apple fixating on their score with intent to raise it every quarter, something interesting must be going on here.
The key to NPS is fixating on the customer, not the number. The score is a useful metric to track, but as with any metric, it is there to inform only. It is up to you on what to do with the information. When a customer gives feedback, it is your golden opportunity to connect and strengthen that relationship. You must build authenticity with your customers, and NPS is a way to crack the door open to directly conversing and learning from your patrons so that you can improve your service, products, and business processes.
How is this magical number calculated?
- Calculate the total number of respondents who replied.
- Calculate the total number of respondents who gave you a 9 to 10 (these are called your promoters)
- Calculate the total number of respondents who gave you a 0 to 6 (these are called your detractors)
Where did 7 and 8 go? These are your neutral customers. They are not fanatical one way or the other so leave them out for scoring purposes.
4. Subtract the percentage of detractors from the percentage of promoters.
Net Promoter Score = % Promoters – % Detractors
For example, let’s say you receive the following ten scores: 10, 9, 9, 7, 7, 5, 3, 3, 2, 1.
Only three out of ten (the 10, 9, and 9 scores) were promoters: +30%
Five out of ten (the 5, 3, 3, 2, and 1 scores) were detractors: -50%
Add the positive and negative percentages together to derive your NPS score: +30 – 50 = -20
The common sentiment is anything above a zero is good, above 50 is excellent, and over 70 is World Class.
So, you want to find out what your score is? Send out a survey by email to your customers, say, once a quarter. You could send it more often – some send NPS surveys after every purchase, but be cautious. It has been found that surveying once a quarter is the most effective and least invasive way to go about it.
You could certainly add more questions to your survey as well, but keep in mind, every time you ask someone to do something (click somewhere, reply to an email, etc.), you create a barrier to your goal. With each added click or question, your chances of someone opting out of a survey increase by 50%. So, with every additional question you ask, the likely hood that your customer will submit the survey decreases by half! Keeping it simple is very likely the best way to go.
It’s also a good idea to only send the survey out to a small percent of your customers each day over a few months. This way you can act on feedback and see your score nearly in real time. These results are more illuminating than only representing a moment in time by asking everyone at once.
Finally: The Value!
You now have your NPS metric but remember, it’s useless without follow-through! For example, as soon as you receive a 9 or 10 score, reach out to that customer and let them know how happy you are to have made them happy. Ask them to share with you what you have done right and ask them to review your products/service and to please let the world know they think you are great! Be authentic and build real relationships here. Let them know their thoughts and feelings matter and enlist their help and support.
In the other direction when you receive a low score you most certainly need to reach out to those customers too. Let them know that you care and are upset you have failed them. Ask them for their help so you can correct what you are doing wrong. Gather every bit of information you can here because this is what the NPS is all about.
Now you are using this simple but powerful metric the way it was intended. You have engaged with your promoters creating a stronger relationship, and they are spreading positivity about you. As for your detractors – you will see patterns in their responses and will use these as actionable items that you will develop into NPS projects prioritizing by quickest return on investment.
If you have a larger organization with the resources and budget to address multiple areas at once, develop a NPS project program with each NPS project reporting to it. Work in unison ensuring organizational alignment and unity. By using the ongoing quarterly survey method mentioned above, you will receive timely feedback to make certain you are going in the right direction. If your NPS starts moving up, you have proof you are getting it right.
Just remember, your NPS metric is only as good as your follow-through. It’s for building deep relationships with your promoters and addressing and solving detractor complaints. Acquiring the metric is the easy part, what you do with that knowledge is where the value is found.
Shoot for a world class 70+ NPS and see what having that many promoters acting as your marketing department can do for you!
Danielle VanZorn, PMP, SPHR, SHRM-SCP