Net Promoter Score (NPS)
There are four main sections to this post:
- What is NPS?
- How do you calculate it? (example provided)
- Why is NPS different?
- Effective NPS follow-up ideas.
NPS – What is it?
Net Promoter Score®, or NPS®, measures customer experience and helps to predict business growth. It is used as a proxy for gauging the customer’s overall satisfaction with a company’s product or service and loyalty to the brand. Thousands of companies large and small use NPS to help them drive their businesses.
Respondents are grouped as follows:
- Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
- Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
- Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
How does it work?
I recommend using NPS (and eNPS – employee Net Promoter Score) as one of the leading and/or lagging indicator KPIs for my clients. Many ask how the calculation is done in order to get a score between 100 and -100. A simple explanation follows. Please note that the basic NPS question goes like this:
“How likely is it that you would recommend our organization to a friend or colleague?”. You can modify it by adding something like “Based upon your experience (of/with) _____________, how likely is it that you would recommend _________ to a friend or colleague?”
NPS Calculation
(Number of Promoters (9-10) — Number of Detractors)(0-6) / (Number of Respondents) x 100
Example: If you received 1000 responses to your survey:
100 responses were in the 0–6 range (Detractors)
200 responses were in the 7–8 range (Passives) – These folks likely cannot make up their minds so they do not count as a positive or a negative.
700 responses were in the 9–10 range (Promoters)
When you calculate the percentages for each group, you get 10%, 20%, and 70% respectively.
Based on the formula above, NPS in this example is 60.
Why is NPS different?
The main reason NPS is different from other numerical surveys of customer satisfaction is that NPS does not assume that a rating of a 6 is six times better than the rating of a 1. It lumps them together as it is far more likely that the 1 through 6 ratings are from customers that are not happy and are likely to complain – sometimes publicly. Also, the 7s and 8s may be easily swayed to an alternative for myriad reasons.
Now, what do I do?
Please enjoy this informative 7-minute video from John Ratliff, former CEO of Appletree Answers, for some great examples of what to do with the individual responses once you get them from your customers. Here is the gist of what John shares:
- Send 0-6 to your Customer Service team to address issues.
- Send 7-8 to Operations Mgr to see what you can do to edge them up to 9 or 10.
- Send 9-10 to Sales team to have them thank the Promoters and share 1-2 things that you are doing that had them score you so high. Provides positive reinforcement and great stories to tell prospects. Sales will likely resist but this is “where the magic happens”. (please see the video for further info)
Be exceptional!
Bill – Certified Growth Coach, Foundations in NeuroLeadership certified, Predictive Index Certified Partner
(bill@catalystgrowthadvisors.com; www.catalystgrowthadvisors.com)
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