Net Promoter Score

Business Net Promoter Score

Net Promoter® was published in 2003 by Fred Reichheld of Bain & Co. It had a huge impact on many organisations because the research claimed that Net Promoter® Score, that is – customers’ willingness to recommend a business to others – correlated with growth. Other researchers dispute this claim but nevertheless it caught the imagination of senior management and has been widely adopted.

Whether it is true or not – the customers’ opinion of their experience is on the management agenda more than ever before – which has to be a good thing!

Calculating Net Promoter® Score…

Customers are asked -
“Based upon your experience of company x, on a scale of 0 to 10, where 0=not at all likely and 10=extremely likely,
how likely would you be to recommend company x to friends and family (to others)?”

Promoters are people scoring 9 and 10; Detractors are people scoring 6 or less. Reichheld’s work says that business growth is driven by creating a surplus of Promoters over Detractors (the Net Promoter® Score) and that loyalty leaders have Net Promoter® Scores of 60% (revised to 80% more recently).

 

What impacts propensity to recommend and Net Promoter® Score?

Based upon ‘voice of the customer’ research that we have conducted across a range of service businesses to identify what experience customers truly value, plus literature searches, we conclude that there are 4 factors that determine customers’ propensity to recommend an organisation:

  • Brand relationship
  • Experience of / satisfaction with product offerings (features; relevance; pricing)
  • Ease of doing business (simplicity; efficiency; reliability)
  • Touch point experience (the degree of warmth and understanding conveyed by front-line employees)

The relative importance of these factors on a company’s NPS varies across businesses and across markets, however, ‘contact with the company’ – that is, the ease of doing business plus the touch point experience – typically accounts, we believe, for about 60% of the total.

For most operational managers, responsible for business functions that handle sales or service interactions with customers, their sphere of influence is this 60% – the ease of doing business and the degree of warmth and understanding conveyed by their people. The drivers of ‘brand relationship’ and of ‘product satisfaction’ – factors such as corporate reputation, product pricing and innovation to name a few – are typically longer term and slower moving.

Focus on improvement not on scores

Recognising the importance of the ease of doing business and the touch point experience, as many organisations do, would logically lead them to focus significant effort on improving the experience their business delivers. However, what is evident, in too many organisations that claim to be driven by NPS is an overt focus on ‘their Net Promoter® Score’ rather than the underlying drivers of NPS. There is an obsession with ‘the number’ but an insufficient focus on strategies to drive improvements in ‘the number’ and consequently the customer experience.

This is limiting the business benefits that should have been gained from focusing on customers’ propensity to recommend. Even Reichheld has acknowledged this shortcoming and said recently at a conference “The score, NPS, maybe was a mistake. It’s not the score that matters, it’s what you do with the score to make Promoters”.

Having advised companies for several years on strategies to improve their customer experience – and on how to use NPS effectively – some important pointers have been identified that characterise the most successful customer experience and NPS improvement programmes.

Firstly, companies wishing to improve their customers’ experience (and their NPS) at key touch points should review the themes that come through in research from customers’ verbatim comments:

  • What are Detractors saying? And, how can we reduce/remove them?
  • What are Promoters saying? And, how can we create more of them?

Although not exclusively the case, it is generally true that:
Detractors are created by perceived shortcomings in the offer, especially price in highly competitive markets, or by the process if it creates complexity, inaccuracy and inefficiency for the customer – essentially not being easy to do business with Promoters are created through customers feeling the company was reliable and ‘easy to deal with’ plus interacting with staff who consistently deliver ‘special’ experiences. Understanding what constitutes ‘special’ for their particular customers provides businesses with significant insight and opportunities to differentiate.

These ‘differentiating opportunities’ vary from business to business and sector to sector but typically include feelings of ‘trust’; feelings that convey ‘a sense of relationship’ (as opposed to simply a transactional process); and dealing with staff who ‘go the extra mile’. Promoters frequently remember and mention staff by name, Passives – customers who score 7 or 8 on Reichheld’s scale – never do!

Focusing on factors that are consistently mentioned by Detractors should be the priority for management. Not only are they creating negative word of mouth but they will be leading to re-work; failure demand and unnecessary, frequently significant, operational costs. In addition, the issues cited by Detractors may suggest that an organisation is attracting the wrong types of customers: people whose needs they cannot satisfy.

Whilst removing or reducing Detractors should be the priority, this may not always be possible as it may require significant infrastructure investment. Experience suggests that focusing on factors that create Promoters can be the fastest way to increase NPS. This requires a detailed understanding of what makes customers of a particular business feel ‘special’ – what are the differentiating opportunities – and then focusing on delivering these special experiences relentlessly.