NPS: Net Promoter Score

Management consulting firm Bain & Co found that many customer surveys failed to measure loyalty. So they began a journey to develop a single question that could act as a benchmark for loyalty. The first thing they did was to seek out which survey questions had the strongest correlation with a repeat purchase. They examined thousands of surveys and found that just one question could accomplish this, which was Would you recommend us to a friend or colleague? The question employs an 11 point scale, similar to the buyer intention scale developed by Prof Thomas Juster in 1966.

See below for what the survey typically looks like. It's an 11 point scale from 0 to 10. 0 was chosen over 1 since the number one can represent first place for some. Next they decided to group how this question was answered into 3 distinct categories. The first group, known as Detractors, marked the answer 0-6. These guys don't like you. The next group answered with a 7 or 8 and are known as Passives. They have no energy for your company. The final group really do like you and marked the answer with a 9 or 10. These guys will recommend you and are most likely to repeat purchase. Then a score is calculated by subtracting the percentage of Detractors from the percentage of Promoters. Passives are discarded as they neither like or dislike you; but only for the purpose of the score calculation. They also recommended that a text question be added so that context could be derived from the measurement with Sentiment analysis.

NPS Survey

So now we have a score that can measure Customer loyalty. t's called the Net Promoter® Score or NPS for short. What's more it's a number we can trust because it's an external measure and it's a number used by our peers too. Every year Bain & Co publish a survey of scores so you can see how you measure up. Top firms like Apple, Amazon & Costco score in the high 70's That's the number to beat! The 11-point scale is nothing new, however. Thomas Juster came up with the same scale in 1966 as part of a buyer intention study. What's new is that more and more leading firms are adopting this measure as their benchmark.

With our platform, NPS is a standard question-type, so we do the calculations for you. And we can roll the numbers up by store, region or product line so you can see performance at a glance.

Action over analysis.

Detractors. OK so these guys do not like you. This is where all your bad profits are. They are bad profits because they are not repeatable. It's very important to be able to identify this group and deal with them right away. Our app will send a "sorry for your experience" email right away and also to the store manager. Reacting quickly to a problem can often turn your detractors around! You can create different email messages based on each answer given, too.

Passives are in-between and have no energy for your company. Typically they feel that they got what they paid for but are also likely to defect when a competitor appears with a similar offer. Knowing who this group are and sending them the right communications at the appropriate moment will be important. Sending the wrong message to the wrong group is a schoolboy mistake you will avoid with our app.

So Promoters are more likely to repeat buy and are less sensitive to price. Companies like Enterprise RAC actively use promoters in their marketing referral programs and they credit NPS with the success of that. All your good profits are here, because they are repeatable profits.

Case studies.

Thousands of companies like Lego, Facebook, Dell and Apple use NPS. Let's look at a few case studies.

When Apple SVP Ron Johnson was tasked with creating the great Apple store experience, he wanted to convert the local PC user using word-of-mouth and referral. NPS was perfect for that. They use email at POS to manage the score, so having a robust email capability was important to them too. Their NPS works so well they are also looking to add Net Promoter People, where the question is "Would you recommend this as a place to work?"

Dell use our emarketing platform to manage NPS in 17 languages around the world. They really like the idea that one survey can be deployed in so many languages with the results all rolled up into one. Bain & Co also did a survey with Dell, where they were able to place a specific dollar value on each customer. Using NPS, they were able to see the actual cost of Detractors, some $68m in the study. So being able to deal with Detractors right away can save money very quickly. They also saw that 1m customers came from Promoters! So the referral programming really works with NPS.

Container Stores, established in 1978, operate 60 depots across the US. Using our platform they can see in real-time the NPS for any given store and react when it goes up or down. Reacting when a score goes up is just as important. Perhaps something good is happening that can be repeated in other stores! Each store manager can see how their individual unit is performing and their manager can see all stores for their region. If a store gets a poor individual score, the manager gets an email right away as does the customer. Being able to deal with detractors right away is a proven method to improve customer loyalty.

Sentiment Analysis

But wait, there's more! What about the text feedback? Understanding what words customers are using to describe their experience is an important semantic measurement. The emarketing platform has built-in Sentiment analysis so you can group customers by the words they use in their feedback.

Making it work - Many of our clients come to us as existing NPS practitioners. They found that not having a robust or consistent survey method was a problem and created an admin headache, especially with multiple languages. Sending automated survey reminders was important too. They really like the idea that they can send personalised email campaigns to the right group and avoid the embarrassing mistake of sending an inapropriate message to Detractors!

Finally, having a platform that could integrate across all the operational systems was the key to making it work across the Enterprise. It's usually a mistake to consider NPS as a marketing-only exercise, cross-functional or operations usually work best!

Next steps.

Now that you know more about NPS what's next? Here are some questions to ask:

  • Are we measuring customer feedback in a robust and consistent way?
  • Are we using different survey methods in different stores or countries?
  • Do we react to feedback right away?
  • Do we know who our Detractors are?
  • Do we know who our Promoters are?

If you answered yes to all these questions then congratulations! You are an NPS rockstar! Otherwise talk to us, we are here to help!

Credits: Net Promoter is a registered trademark of Satmetrix. In this article we used examples from the book The Ultimate Question by Fred Reichheld with Don Markey. We also referenced the published papers of Thomas Juster who devised the 11-point buyer intention scale.