Beginners Guide to Net Promoter Score and System

How likely are you to recommend me to your friends on a scale of 0 to 10? 

On the internet, everyone eventually comes across online customer reviews. Some reviews are slanderous while others are posted seemingly by obnoxious cheerleaders touting a company’s products.  

Most of us, regardless of what we truly tell others, read the comments and base our opinions on those reviews.  Despite our lack of relationship to those people giving the feedback, there’s always a part of us that heeds warnings or gets excited based on another’s perception of a company, product, or service.

Wow, this customer LOVES her new boots. They are cute. I want them, too!  

or

Boo.  Those people are terrible, they don’t take care of anyone! I can’t believe they did that.

Which brings me to the Net Promoter Score (NPS) methodology.

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What is the Net Promoter Score and System?

What is Net Promoter Score? How can it help my company?  Does it even matter what some random person thinks of my business?

It all comes down to customer experience and how your company strategizes around delivering it. 

The Net Promoter Score and System is a management tool that is used to determine the loyalty of a company’s relationships with their customers.

It’s a great way to determine which of your customers are willing to stand for your product, as well as to more easily and accurately measure the customer experience.

The function of NPS is to calculate a score and generate quantitative insights needed to better your business. Positive customer feedback and a high Net Promoter Score equals happy customers and higher profits. The bottom line? The NPS is a great indicator of business success.

The Net Promoter Score and System was created years ago by, and a registered trademark of, Fred Reichheld, Bain & Company, and Satmetrix. The concept is fairly simple. You need reliable feedback from your base customers to keep their business. Therefore, you request feedback from them so your company can then make decisions based on customer needs or satisfaction levels. You then establish a questionnaire that creates beneficial responses so you can develop long-term relationships and loyalty with your customers.  

HOW LIKELY?

On a scale of 0 to 10, how likely would you be to recommend our product to your friends?

This simple question is how you measure your Net Promoter Score.  This question is the beginning of the feedback loop.  This simple question creates a score for your company to then better your business, to then open up questions to the customers.

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The Net Promoter System uses a 0 to 10 scoring scale. The breakdown is as follows.

Promoters

Those respondents who give you a score of 9 to 10 are customers called Promoters. They are the loyal customers. Their responses alone generate referrals for new customers. These are the customers whom others will read online and feel inspired by. 

I must buy this exciting new product, too!  Look how happy these people are, and they love the amazing customer service that they are getting. I must try this company! I’m in! 

Promoters remain loyal and generate new business for your company in the long run by sharing positive feedback and recommendations to others. They can potentially do the advertising work for you. These are the people we want to follow up with to learn more about their experience with the company and continue doing the work well.

Passives

Those who give you a score of 7 to 8 are labeled Passives. Passives are exactly as they sound. They are the middle-ground customers. They weren’t unhappy with their experience or product but are not completely committed forever. They are the customers who got what they wanted but could easily walk away if another company came along with something that was a little more sparkly and shiny.

Detractors

Customers who give you a score of 0 to 6 are Detractors. These are the unhappy folks. They generate negative feedback and are not likely to come back. Their reviews reflect badly on your business reputation and can discourage anyone from using your products or services. 

Negative feedback from the Detractors should be used as a resource. Why? Because it gives you an opportunity to improve your business. Instead of letting the negative slide by, analyze the kind of feedback you’re getting from Detractors and implement needed changes to deliver better customer experiences.

Calculating the Net Promoter Score

To calculate your Net Promoter Score, take the percentage of Promoters minus the percentage of Detractors. Passives count towards the total number of respondents, thus decreasing the percentage of Detractors and Promoters and pushing the net score towards 0

Promoters: 40%  

Detractors: 16%  

Net Promoter Score: 24

With your score now generated, the company can then turn around and generate more free-form customer feedback using open-ended questions to determine the next steps.

By isolating individual aspects of the customer experience, like customer service, product, packaging, purchase process, etc., you can more easily identify areas that need improvement.

Acting on insights you gain from the NPS methodology helps activate your Promoters as well as recover Detractors.

Loyalty

Retaining customers and creating lifetime loyalty is one of the most important goals of every business. Loyalty brings repeat business and future earnings while minimizing the cost of customer acquisition.

By using NPS to drive loyalty, you can create relationships with repeat customers who are willing to recommend your business to their friends. You can also direct your attention to Detractor-related issues that need to be resolved immediately. Addressing your respondents’ feedback and concerns can put your company at the top. You can become an industry leader with a community of loyal customers and Promoters. Those Promoters then generate new customers themselves.

Connecting with customers through the Net Promoter Score and System can help you make great decisions for your company as well as improve customer experiences. By knowing your score, you can gain a better understanding of where your current customers stand, as well as create changes as needed. The NPS is a reliable metric that can enable you to be the best at what you do. 

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