Much has been written about Net Promoter Score (NPS) since its arrival in 2003, with its author Fred Reichheld describing it as the single measure you need to identify the potential for future growth.
But just how much can NPS be trusted ? And how far should it be used ?
For the uninitiated, NPS is a one-question survey, asking customers whether they would be willing to recommend your company, on a scale from 0 to 10. Nines and tens are ‘promoters’, sixes and below are ‘detractors’, leaving sevens and eights as ‘indifferent’. Subtract your detractors from your promoters (as a percentage) and you have your NPS score. You can then track this over time internally, and compare with other industries or competitors. The theory goes that NPS scores are a strong indicator of future profits growth, because it shows how well your customers are acting as loyal advocates marketing on the company’s behalf.
Having worked with NPS at a number of companies, our experience is to tread carefully with NPS. Here’s what we advise for using NPS wisely:
- Look Beneath the Headline Number – getting a high positive score (+30 is high) requires either very few detractors (D) or lots of promoters (P) to outweigh them. But the two scenarios require very different actions to deal with them. If you have 40% of Ds and 60% of Ps, then your proposition is unstable – it can either go wonderfully well when delivered, or fall down on its promise almost as often. Compare this with 0% Ds, 30% Ps and the remaining 70% indifferent. Here, the likely diagnosis is a stable offer that never disappoints, but lacks sufficient WOW! factor to create a large, advocacy group. Yet the NPS score for both scenarios is identical. Customer Faithful works at the Detractor/Indifferent/Promoter level, to identify the benefits and loyalty impact with each group in turn. Only then can you truly make targeted changes to your customer offer to improve your NPS performance.
- Ask Another Question – we’ve sat in hundreds of focus groups and reviewed thousands of quant survey results. Our overriding observation: what people say they do, and what they actually do are rarely the same ! So simply asking “Would You Recommend?” isn’t enough. Customer Faithful standard practice is to also ask “And how many times HAVE you recommended…?” This extra question gives much more grade-able insight, and delivers data on the range of endorsement activity going on. We use the range of responses to this 2nd question to create scenarios e.g. if 50% of advocates recommend us more than 3 times a year, how many referred prospects will that bring ? How far should we go to ensure a conversion from those warm referrals, vs. our regular mass advertising budget ?
- Use NPS as additions, not replacements – many companies already have a huge amount of customer insight on loyalty. Much of it may be less formalized – perhaps lying in the heads of salespeople or customer service agents, or buried in the transaction databases in stores or websites. Don’t swap out of this valuable insight, just because NPS provides a tidier metric. Instead, Customer Faithful works to structure existing data first, then align it with NPS. For example, say your customer service team reports that many smaller accounts are complaining about call centre wait times vs. larger customers who have dedicated managers. You decide to split your NPS results by account size segments, and sure enough, its small accounts driving your detractors. Customer Faithful would then run qual research with these groups, seeking out the range of benefits that they value as customers, and where things go wrong. We’d look at unprompted and prompted response to call centre queuing, and test improvement ideas against impact on recommending to others.
In summary, we work closely with clients to help them get the best out of NPS – not just to use it in isolation as a quarterly improvement yardstick, but harnessed to wider techniques which can offer the clues for how to improve NPS and where in the proposition to make the change.
For more information about how to make NPS work for your business,
contact us at email@example.com