What is the Net Promoter Score® and Why Is It So Important?

June 29th, 2020

For any business that has customer-facing operations, the ability to measure customer satisfaction is crucial. As well as being able to identify potential issues that are causing customers to be unhappy with your service, a framework for measuring satisfaction provides business and agents with performance based targets. The framework also gives employees a better understanding of what good customer service looks like and how they can improve.

There are numerous different methods of measuring customer satisfaction, with some companies choosing to implement a blend of two or three methods. A popular one used by many businesses is the Net Promoter Score.

What is the Net Promoter Score (NPS)?

The Net Promoter Score is used to measure customer loyalty and is based on the following question:

“On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?”

The scores are then calculated on a scale between -100 and 100, to give the NPS score. This score enables companies to understand how happy their customers are with the company. If a customer says they are highly likely to recommend you, that shows very high levels of satisfaction, so the NPS is an indicator of whether customer loyalty is improving or decreasing, which is key to business success.

Once a company has this starting point for a measurement, they can track their performance and embed the measurement into their performance management framework. The business can then work towards the shared goal of improving their NPS and work on improvements that help boost the NPS.

As well as asking customers to rate the likelihood of recommending them, companies can also glean more information, such as asking why they provided this score. The NPS allows companies to track their own customer loyalty but it also allows them to compare against competitors who share their NPS.

Calculating the Net Promoter Score

The calculation for NPS is:

% Promoters - % Detractors

So, any customers with a score of 6 or lower are categorised as detractors and customers with a score of 9 or 10 are classed as promoters (7 and 8 are passives). The percentage of each is calculated and then the detractors are subtracted from the promoters to give a score of between -100 and 100.

The reason that the passives are not included in the calculation is because they are neither promoting the company nor causing negative damage by bad mouthing the company. However, it is still good to track the percentage of passive customers, as there could be ways to implement improvements to the service that could push more of them into the promoter category.

Why Promoters Are So Important

As well as being customers that are likely to give repeat custom, promoters will advertise your company for you. If someone they know is looking for the service or product that you offer and they have been happy with theirs, they will refer them to your company and generate more business for you. People are likely to listen to recommendations from their friends and family because they trust them, so having promoters that work to enhance your brand is really valuable.

Detractors are at the other end of the spectrum, they are unlikely to use your business again and in some cases, they are so unhappy with the service or product that they will tell people all about their experience to put them off using your business.

This information can usually be a lot more insightful than simply asking ‘How satisfied were you with Product A on a scale of 1-10?’ as it shows how they feel about your company overall and their feedback is not just based on one product or one conversation.

The NPS is a good measure for growth of your company, as an improving NPS will indicate that your brand is growing, with more people happy to promote your company than there are that are unsatisfied with your company.

What NPS Score Should Businesses Aim For?

Generally speaking, an improvement on your previous NPS shows that your company is heading in the right direction. The globally successful businesses tend to have scores of around 70, although some brands such as Facebook, which have battled several recent court cases, have low scores despite having high revenue. Not all successful companies have high a NPS.

How to Use Your NPS

NPS Curve in OMBEA Insights OMBEA Insights dashboard provides an easy way to keep track of NPS accross all online and on-site touchpoints

In many companies, a customer experience team will analyse the data that is collected from the NPS survey. As well as using the scores as an indication as to whether there is a problem (e.g. a sudden dip in score), the feedback that is provided with the score is often even more useful. This feedback can help the customer experience team to pinpoint specific processes or product issues that can be resolved.

The customer experience team can provide information to the relevant area of the business that is responsible for resolving any highlighted issue, so this could be the product team or it could be that high call volumes are leading to queues, which call centre managers could work on resolving.

In some cases, customers may even make suggestions that the customer experience team had not considered. Without this insight, companies are assuming that customers are happy with the products and service that they receive.

One of the key objectives of using the NPS is to reduce churn by taking the relevant actions through analysis of NPS data. The faster that the customer experience team is able to react to the data and start the process of making an improvement, the better the chance is that the NPS will not be negatively affected.

Choosing the Right Channel for Sending the NPS Survey

The NPS survey can be presented to the customer in a variety of channels, from using their phone keypad at the end of a call, to receiving a text message and answering the questions on their smartphone. Choosing the right channel is very important, as you might get more responses from one type of channel compared to the other.

If you are just capturing the score, asking the customer to provide a score at the end of a telephone conversation may be best. But if you are asking customer satisfaction survey questions that require the respondent to provide further information, this would be easier for them to do by email or text.

Where customers are going into stores, restaurants, bars etc. and are walking through your business premises, a physical way of collecting the feedback is usually more effective than sending out a text or email after the visit.

For example, customer satisfaction terminals such as the OMBEA ExpressPods that feature smiley buttons can get a much better response rate than alternative methods. Because the customer sees the terminal as they walk out of the business, they are physically reminded to leave their feedback and because it is quick to leave feedback (just pressing one button) they will happily give the small amount of time taken.

Follow Up Work

Using the NPS is not just about concentrating on the feedback provided by detractors. You also need to listen to what the promoters are saying about your company. These are the customers that are loyal to you, so they might overlook minor issues because they have been with you for so long. However, when these loyal customers provide feedback about something they would like to see improved, you should be listening because the promoters can soon become passives and even detractors if they feel their feedback is not getting listened to and acted upon.

Using a Blended Customer Feedback Approach

Although the NPS is a very valuable piece of measuring customer satisfaction, it does not collect all types of data that a successful company needs to build a full picture of the customer experience. A combination of different feedback tools will give a better all-round view of customer satisfaction.

Other customer feedback tools include the Customer Satisfaction (CSAT) Survey, Customer Effort Score and monitoring social media comments. There are many more too, so it is worth doing a good amount of research into which methods are likely to get the data that the business needs to build improvements.

Using a combination of the NPS survey and having a smiley button ExpressPod can form a good combination. The NPS data reveals the overall feelings and loyalty that a customer has for a company. On the other hand, the smiley button survey provides a quick indication of how the customer feels about the current service they just experienced. So one measurement is scoring the long-term relationship, whilst the other is a snapshot of how the customer feels in that instant.

The results of the NPS survey are analysed and could take some time for actions to be put into place, whilst the results of the ExpressPod are available in real-time for managers and staff to react to. For example, there could be long waiting times in a store because there were insufficient staff numbers at a certain time of day. Store managers could use that information to adapt the working rota to have more people working at those critical times.

The two types of customer satisfaction methods really complement one another, in terms of enabling long-term and short-term business improvements. It also gives customers an opportunity to provide feedback in their preferred type of channel.

Conclusion

The NPS is a very valuable way of measuring customer satisfaction, particularly for companies that are looking to grow. It can be as flexible as you want it to be i.e. you can just ask the one question, or you can ask a set of questions to provide a deeper level of feedback data. It is one of the most popular types of customer satisfaction surveys but many companies choose to implement at least two different types of customer feedback tools, so that a variety of data is collected.

For companies with premises that customers visit, having a quick and easy way to leave feedback during their visit is the best way to get a high response rate. It can also help prevent customers from becoming detractors, as when they push the sad smiley to confirm they were not happy with the experience, this can make them feel better, rather than complaining through social media or sending a complaint to the complaints team.

If you are interested in finding out more information about how the OMBEA feedback button technology works and can help your business to monitor customer satisfaction, visit the website and see the range of options available. They can also be used for providing employee feedback, so if you are looking to collect either customer or employee satisfaction data, the smart OMBEA technology could be the ideal solution.

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