Since Fred Reichheld developed the Net Promoter Score (NPS) back in 2003, it has been widely accepted as one of the most reliable indicators of customer satisfaction and loyalty. Reichheld has confidently stated that NPS can also measure the capacity for growth of any company more accurately than any other metric.
NPS – the nuts and bolts
NPS is centred upon what Reichheld describes as the ultimate question – How likely are you to recommend company X? Customers can respond with an answer between 0 and 10, where 0 is not at all, and 10 is extremely likely.
- Customers scoring 0 – 6 are deemed to be detractors.
- Customers scoring 7 – 8 are deemed passives.
- Customers scoring 9 or 10 and are classified as promoters.
The NPS is simply the percentage of promoters minus the percentage of detractors.
If you do not know how to ask the right question you discover nothing
Incredibly simple, incredibly effective
The secret of NPS’s success lies in its simplicity, both in its design and in its use. And because it has been adopted as a virtual international standard, it’s ideal for benchmarking your performance against competitors. By supplementing NPS with additional questions, it can also be used to provide greater insights.
Big Strengths, Big Weaknesses
Although simplicity is the NPS’s great strength, it is also its main weakness, because it fails to drill down into the causes of a strong or weak overall score. Score lots of nines and tens and your strongly positive NPS will tell you that you’re doing a great job at keeping your customers happy, but it won’t tell you what’s driving high satisfaction.
Similarly, if you have a negative NPS it won’t tell you where you’re letting your customers down. Is it a particular product? Or a particular aspect of your customer experience? These are the questions you must answer if you’re to identify issues and correct them.
The goal is to turn data into information, and information into insight
Do you really know what is driving your scores?
A strong NPS can hide weaknesses in your operations. This could be a scenario: where you’re scoring well but sales are not increasing or may even be declining. Surely your high NPS means you’re getting lots of referrals? Maybe so, but if new business is channelled through an under-resourced call centre, high call-waiting times or inconsistent service delivery could drive massive attrition in the sales process.Without deeper analysis, NPS fails to provide critical insights into where your business is achieving high performance, and where your operations are struggling.
Use scores to guide you to the root cause
If you’re gaining lots of nine and tens and have a positive overall score, ask yourself these questions:
- Are sales increasing?
- Are sales broken down into new and repeat business?
- If not, how can I learn if I’m generating referrals?
- If my NPS is high but new business is declining, does this indicate an operational issue somewhere?
If you have a low or declining NPS score, you face a different set of questions:
- How do I find out what is driving low NPS?
- If I don’t know what the problem is, how am I going to fix it?
- Do I know how to fix the problem when I find it?
NPS and operational excellence
NPS is fantastic at gauging overall customer satisfaction and indicating growth potential. Yet it can be an even more valuable tool when supplemented with additional information, enabling you to gain a deeper understanding of your operations and make informed decisions.
Supporting NPS with data validation
At dhp we have a unique data validation tool that can help you quickly identify the factors that drive your NPS, enabling you to maximise the potential of positive or negative feedback or take corrective action to solve challenges.
Through real-time data monitoring, we can identify the trends that are being driven by your customer experience, enabling you to remove bottlenecks and create a positive journey from start to finish.
By undertaking a pragmatic, data based review of your end-to-end customer processes, we can identify and eliminate waste, improve productivity, enhance the customer journey, reduce your costs and provide the additional insight needed to maximise NPS.
