Shortly about NPS
The Net Promoter Score (NPS) is a metric system that was introduced, and popularized by Fred Reichheld in 2003. NPS is one of the most respected Key Performance Indicators (KPI) that provides accurate insight into customer loyalty. Customer loyalty is an important force that drives and sustains brands and it is a proponent of customers’ satisfaction, which remains key to a brands success. It is therefore expedient for organizations to have clear insights about how customers perceive their brand and the services they offer.
NPS denotes customer loyalty based on the values selected as answers to questions on a scale of 0-10. 0 is equivalent to not likely and 10 is equivalent to very likely.
Grouping customers based on the values of their answers
The NPS metric is very simple. Any organization that is interested in knowing what their customers think of their service and the commitment of the customers to the organization’s brand will setup a question or questions (we will get to this later), multiple choice answers to pick from a scale of 0 – 10.
Customers whose answers are between 0 – 6 are grouped under detractors in the NPS system. The system believes that customers in this group can damage your company’s reputation through their negative word of mouth. The indication is simple. They are not satisfied with the products or service.
Customers whose answers are either 7 or 8 on the scale are grouped under Passives. Passives will not spread negative comments about your products and services, and will never feel the urge to promote your products and services. Passives are usually satisfied with the products and services but they are very open to offers from your organization’s competitors. This indicates that they can easily stop purchasing your products and services for that of another company.
Promoters are very likely to continue patronizing your company. These ones are very satisfied with your products and services and will recommend them to others. The values for their answers on the scale is either a 9 or 10.
There will always be a combination of all three groups of customers on any organization’s NPS metric. If an organization has just one detractor on their NPS metric, it goes to show that they need improvement in some areas and the organization needs to understand the challenges the customer has with their business before deciding what actions to embark upon.
Apart from customer loyalty evaluation, the NPS metric can be used to ascertain employee engagement. Employee engagement is a very important metric that organizations need to measure regularly in the quest to satisfy all of their customers i.e. the detractors, passives and promoters. This goes to say that if an organization’s employees are not loyal and committed to the business; their customers will most likely get services that are below par and this would cause them to rate the organization between 0 – 6 on the NPS metric. The NPS metric works also for measuring employee engagement and loyalty. This is sometimes called the eNPS with three groups, as one would have with customers. Essentially, customers’ satisfaction is connected to employee engagement and loyalty therefore, it is important that organizations measure their employee engagement prior to measuring their customer loyalty.
Measuring the actual NPS score and what the score means for business success
The exact Net Promoter Score (NPS) for a business is calculated by subtracting the percentage of customers who are detractors from the promoters.
This score will intimate any organization with their customers’ satisfaction levels and how much is needed to improve the products and the service. Many organizations make the mistake of relying on their NPS metric results completely but research has shown that the NPS metric results however excellent they may be do not determine the success of a business alone. In fact, the NPS metric results for this month may turn out differently than that of the next month. The implication of this is simple. The NPS metric results needs to be paired with analytics to ascertain the right actions that will lead to the organization’s success. As much as organizations need to do their best to ensure customer loyalty and satisfaction, the results of the NPS metric alone will not provide answers to all the important questions that do not concern customers sometimes.
The score will definitely help you identify loyal customers and the ones that are your brand ambassadors. You can then scientifically measure and consider what needs to be improved on all facets of your business to encourage customer loyalty.
The NPS questions used by top industries
Before looking at some of the questions used by top industries to determine customer loyalty and other Key Performance Indicators (KPI), it is important to note a few points which goes a long way to determine how much these questions and the answers provided, gives accurate results and actionable insights.
There is a rife argument about the number of questions that can be contained in a survey. Some analysts argue that surveys should have no more than three questions while some other groups of analysts argue that survey questions should be no more than one question. While this argument between both groups remains an important subject, the underlying message here points to the fact that numerous questions do not provide accurate answers as customers will most likely feel burdened by the number of questions and will not genuinely answer them.
NPS questions are best suited for the Keeping It Short and Simple (KISS) approach as this encourages customers’ participation.
The NPS metric only works excellently if there is a result in sight. Many organizations do not use this to tailor their questions. They often hover between market research questions and customer feedback questions and completely miss the point along the line.
Now the questions.
NPS survey questions may be presented in different forms. Important elements that will show that you want to get better through your customers suggestions and feedback should be present. While some advocate for presenting this in one question, and others believe that you can be expressive on more questions. Three questions is a very good benchmark and these are the top examples used by industries. Each question has multiple-choice answers on a scale of 0 – 10, with 0 meaning highly unlikely and 10 highly likely.
Based on your experience, how likely is it that you would recommend our products, services and brand to your friends, family and acquaintances?
What is the reason behind your ratings?
What is the one thing that we could do differently to increase the value of our products or services to you?
Question 1 is the most important question for your NPS metric and with this; you get to identify the passives, the promoters and the detractors.
Question 2 is equally important and is a good way to get the customers to bear their minds about what they feel about your service. This question cannot be based on the 0 – 10 scale. Instead, customers should be provided a blank space to write out their comments exactly how they feel.
Question 3 shows your organization’s intent to get better. Please tell us how we can improve. Please tell us what you like the most about us. These are the underlying requests in question 3. There will be different suggestions, criticisms, and comments from customers. You cannot fulfill all of them however; you need to carefully identify the driving points about your customers’ behavior while you make appropriate changes.
The actual NPS result is derived by subtracting the percentage of detractors from promoters. Your NPS value will help you identify unhappy customers; help you determine what drives customer loyalty and the things you can do to improve it.
The real power of the NPS metric system depends on the steps you take after you get the results from the survey. The way you respond to your customers’ will determine if there will be an increase in the number of loyal customers along the line.
The questions above can be reworded but it must be straight to the point, consistent with your survey and for different customers. Every organization should use the NPS metric system to identify the driver parts of their customer engagement and loyalty.
A common feature used to determine how much customers resonate with the survey is to ask some attribute questions.
“How would you rate our response to your demands?”
A scale of 1 – 7 is perfect for this, with 1 as very unresponsive and 7 as very responsive.
This will make the customers aware that you are concerned about serving them and that you are committed to further improvement. This is advisable for subsequent surveys and points you exactly at areas you need to improve your efforts.