Building your net promoter score
Friday 9 December 2011
The net promoter score (NPS) concept is a tool to guide companies on how to build more profitable customer relationships. It has been adopted by many businesses, initially in the US, but increasingly worldwide.
The NPS was developed by Fred Reichheld and Satmetrix, Bain & Company. Based on extensive analysis of customer research and surveys, Reichheld identified that the single most important question to ask customers is whether they would recommend your company to a friend or colleague.
Using a 0 to 10 scale, they divide respondents to this question into three groups:
- Promoters, who give an answer of 9 or 10
- Passives, who give 7 to 8
- Detractors, who give 0 to 6 as their answer
The NPS is then a simple calculation – the percentage of promoters minus the percentage of detractors. So if 50% of respondents answer 9 or 10, and 20% give between 0 and 6, your NPS is 30%.
But is 30% a good score?
It’s relative to your market and how your competitors are scoring. Satmetrix say that the average company has an NPS of 5% – 10%, but that those with the “most efficient growth engines” have an NPS of 50% – 80%.
As an example, figures given by Satmetrix show that in 2011 Apple Retail has an NPS of 72% in the US, 67% in the UK, 70% in Germany and 57% in France (http://www.netpromoter.com/np/compare.jsp).
Customers who actively support your brand are more likely to become repeat customers, recommend others (generally at a low cost of acquisition), and be less price sensitive. In short, promoters are sustainably profitable.
Detractors, on the other hand, are more likely to shop around, complain to the company and be less profitable.
It is probably also easier for employees to understand the practical things they can do to make a customer more likely to recommend the company, than it is to relate their actions to a wider range of customer satisfaction metrics, many of which they have no control over. Every employee interacting with a customer can be coached to make that experience better and better.
Can training support NPS?
It is unlikely that standard off-the-shelf customer service programmes will really make any great difference to the NPS. The starting point for the design of the training needs to be an in-depth understanding of the moments of truth in the customer experience. It is a constantly moving state – a step-up in service quality, soon becomes the norm, and so the next step up is needed and so on.
Any training programme, for sales or customer service teams, aimed at improving NPS scores will need to be fully endorsed at the top of the organisation, and must have sustainability built in, so that front line staff are being coached and supported on a day-to-day basis in the workplace.
NPS is, in my opinion, a valuable tool to measure and track performance to grow the business, but the business needs to put the systems, skills training and customer-led culture in place to be able to make the on-going change to grow their profitability.
Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.