Intro to Net Promoter Score (NPS)
What do companies such as Apple, Zappos, JetBlue, HomeDepot, American Express and PayPal have in common? All have created customer-obsessed companies using Net Promoter Score. Here is a larger list of companies using NPS.
NPS has been called “The Ultimate Question” for its incredible value to growing a business. Research by Bain & Company shows that long-term profitable growth is highly correlated with a company NPS.
The overall logic is that every company's customers can be divided into three categories. Promoters are enthusiasts with high degrees of loyalty and high probability of sharing word-of-mouth marketing. Passives are satisfied but unlikely to refer the product to a friend or family. Detractors are unhappy customers and have a propensity to share this negative opinion.
The NPS is best collected using two questions. The first question is “How likely are you to recommend our product or service to a family member or friend?”. The second question is “What is the main reason for your answer to the first question?”.
The NPS is calculated by taking the percentage of customers who are promoters and subtracting the percentage who are detractors.
This score is then analyzed against industry benchmarks or competitor scores. In addition, the qualitative information gathered in the second question is analyzed for trends and patterns across the entire customer experience. For example, this analysis may determine that the detractors are in fact happy with the product but unhappy with customer service, the price or the packaging.
Once this data is collected, a company can use it to re-engineer specific points of the overall customer experience. In addition, the company can use the data to follow-up with individual relationship building communications across the entire customer base. Aligning every department and every individual with the NPS is the first step in creating a customer-obsessed company culture.