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.
The NPS scale has 11 points 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, mark the answer 0-6 and unlikely to recommend your product. The next group answer with a 7 or 8 and known as Passives. They have no energy for the product. The final group, Promoters are most likely to recommend your product and mark the scale with a 9 or 10.
The NPS 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.
So now we have a score that can measure Customer loyalty. It'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.
Detractors. 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 basic mistake you will avoid with our platform.
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.
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.
What about the text feedback? Understanding what words customers are using to describe their experience is an important semantic measurement. The platform has built-in Sentiment analysis so you can group customers by the words they use in their feedback -now with Machine-learning too.
Ask these questions about your Customer feedback process:
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.