Net Promoter Score (NPS): What is the fuss about?

You’ve no doubt seen plenty of mentions of the Net Promoter Score (NPS) and heard how many large businesses swear by them. But you may be wondering why there is focus on one, simple-looking, question and why you should consider using it in your customer satisfaction surveys.

To discuss the Net Promoter Score let’s first look at the theory.

NPS was developed in 2003 by a partner at Bain & Company.

Fred Reichheld was involved in research to understand the relationship between customer satisfaction metrics and business success. His research indicated that asking customers the extent to which they’d recommend a brand to friends and colleagues was the single best predictor of customer loyalty and business growth potential.

Respondents to the question are segmented into ‘promoters’ (9 or 10) or detractors (0 to 6), with 7 and 8s considered passive. The NPS score is calculated by subtracting the proportion of detractors from the proportion of promoters to give a score ranging from -100 to +100.

Some people are dismissive of the Net Promoter Score metric because the promoter cut off seems harsh. It’s true that 7 and 8 out of 10* is fairly good. At that level you are certainly quite positive towards the brand.

But the research supporting the calculation suggests that unless you’re a 9 or 10 on the scale you’re not likely to actually recommend the brand in practice. And this is what it comes down to. Advocates say that they are VERY likely to recommend the brand, not just quite likely. The nature of the calculation does mean that many brands are deep into negative territory on their NPS scores. But don’t get too caught up by the exact numbers.

The real value in the NPS metric is being able to link it to other questions in your survey or previous surveys to:[br_tc]- Understand what may be causing detractors to state their low likelihood to recommend – Trend your Net Promoter Score over time to monitor the impact of business initiatives – Compare to competitor scores

The Net Promoter score question is now often built into survey tools making it much easier than before to use. We’d highly recommend its addition to a customer satisfaction survey. But it needs to be used and analysed in the right way to really add value to your customer insight.

*even if it is actually an 11 point scale…