NPS or Net Promoter Score, is a methodology of measuring your customer satisfaction and loyalty to your brand using an index-range-based scoring mechanism.
NPS as a methodology was launched in 2003 and was based on surveying your customers, asking them how likely it is that they would recommend your company to a friend or colleague.
Customers were asked to answer on a scale of 1-10, 1 being very unlikely and 10 being very likely. Those customers who scored 9-10 were classified as Promoters, loyal customers who continue to buy and refer others to you. Those customers who scored 7-8 were classified as Passives, satisfied but unenthusiastic customers who are vulnerable to competitive offerings. Those customers who scored 0-6 were classified as Detractors, unhappy customers who can damage your brand and growth through negative word-of-mouth.
The percentage of detractors was then subtracted from the percentage of promoters and resulted in the NPS score.
NPS has evolved into a discipline that manages your customer's experience of dealing with your company whereby you are regularly contacting your customers, understanding their grievances, remedying them quickly and in full and ultimately endeavouring to manage and maintain as much of your customer base at promoter level as you possibly can.
Something else to keep in mind when developing an NPS methodology is that you are ideally looking for the score given by your customer to provide you with Actionable Insights. Wherever possible, you should seek to gather information that you can use to positively manage your customer's overall experience of dealing with your company. Actionable Insights are concrete findings that you can use to meet customer expectations and drive positive business change.
The addition of auto follow-up procedures being triggered when specific index scores are selected by your customer is a great way of ensuring that your NPS result is doing the job it was intended for. Negative triggers should drive immediate actions via a mapped-out path to accountable individuals to remedy the issue. The trigger to remedy process should be visible to all stakeholders within the company. A similar process should apply for positive triggers although a lesser sense of urgency can be applied.
An effective NPS methodology and discipline can bring significant competitive value to any business in several ways including;
- Increase Cross-Selling and Upselling: Promoters buy more than detractors. Therefore, your marketing and sales efforts can be effectively tailored to those who are more likely to be responsive to cross-sells and upsells.
- Increase in Referrals, Leading to Increased Customer Acquisition: by easily identifying your Promoters, you can promote or seek referrals to new customers effectively.
- Increased Customer Retention: By easily identifying your Detractors and unhappy customers, you can take action with these Detractors to improve their customer experience, so that you retain their business, and hopefully convert them to happy customers!
- Measuring and Understanding: Conducting regular NPS surveying means that you are more aware of the percentage mix of promoters, passives and detractors in your customer base, and can therefore measure the changes that any of your initiatives (e.g. product changes) effect, and also identify when any disruptive changes occur.
- Industry Competitiveness: In many industries, you can easily measure and compare your NPS score to your industry competitors, and therefore benchmark yourself against these companies.
- PR & Marketing: Achieving a high NPS that compares favourably versus your competition is someone that you can use to promote your company through marketing and PR activities, therefore attracting new customers to your company impressed by this, and also letting your existing customers see that they have made the right choice!
Now that we have looked at how regular and actionable NPS surveys can benefit an organisation and the competitive value that NPS surveys can bring about, it is wise to also look at guarding against the cons of net promoter scoring, which I will do in my next blog.
