The Net Promoter System
First things first, let’s establish what the net promoter system is, who uses it and why. Once you’re convinced of the benefits of NPS, we’ve got some tips on getting internal sign-off to start tracking NPS.
Once you step into the Net Promoter world, it’s hard to imagine a world without it. The ‘S’ in NPS can stand for multiple things; Most commonly one would use it for ‘score’, but it is also used as the ‘system’ or less commonly, survey. We are going to uncover the world of the Net Promoter System and how it works.
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A brief history of the Net Promoter System
NPS was invented by Fred Reichheld in 1993. His idea was for a standard measure for predicting customer purchase and referral behavior. It took off when Bain & Co adopted it in 2003. Today, NPS is among the commonest forms of measuring customer attitudes toward brands and business reputation.
What do customers think about the Net Promoter System?
It’s hard to tell whether customers are interested in your company’s NPS score. For sure it’s a good marker for whether a brand is thought of positively. However, there is precious little empirical evidence that customers make choices based on NPS ratings. Anecdotally, there’s every reason to suggest customers will be wary of companies with poor NPS scores.
But then NPS isn’t really for customers to worry about. First and foremost, NPS is a business KPI to benchmark customer loyalty and measure variances. The net promoter system can be a good yardstick for businesses to see whether their existing customers are helping them grow their business or doing the exact opposite.
Who should be using NPS?
Anyone and everyone! The Net Promoter System is appropriate to organizations of every type, sector and size. It’s used throughout the Fortune 1000 and among far smaller businesses too. In that respect, NPS is a great leveller – a business tool that’s exactly the same for tiny companies on micro budgets all the up to mega-bucks corporations.
NPS measures peer promotion and therefore loyalty. It clearly describes just how much a certain brand, organization or product is likely to be recommended by certain individuals to other people.
You don’t even need customers to get value out of NPS. It’s just as valid to use NPS to measure the likelihood of employees recommending employment at a company, as it is to gauge customers recommending its products. Or take public and governmental organizations – whose service users aren’t ‘customers’ because they have choice whether they use the service or not – using NPS as a measure of customer satisfaction.
Why is measuring NPS important
The net promoter system is tried and trusted
NPS is a firmly established standard for customer measurement. It’s both mature and highly popular – a KPI that all stakeholders understand, including customers. This makes it easier to get buy-in for NPS initiatives from management colleagues and budget holders. Measuring NPS means following in the footsteps of the world’s leading companies and being able to call upon tried and tested NPS strategies.
NPS impacts the bottom line
NPS transcends just how satisfied or even positive your customers are. It measures the likelihood of repeat business and therefore indicates future retained (and potentially incremental) revenue. This is what makes NPS so commercially significant. No wonder, then, that company boards are often more receptive to charting NPS than by the underlying concept of making customers as happy as possible.
NPS gives macro and micro insights on customer loyalty
NPS can zoom in and out – giving you a range of perspectives on customer loyalty. On a macro level, you can look at how customer loyalty applies to your entire organization. This is using NPS as a high-level KPI. On a micro level, you can zero in on specific products and services. Or even people.
Take the example of a hotel chain with properties all over the country. The brand is the same everywhere and so you track NPS for that. But you can also track NPS for each individual hotel, and rank them accordingly. The highest-scoring on the NPS scale are going to enjoy the most referrals and loyalty from customers – the lowest scoring, the least. So if you can pinpoint the reasons and differences across your estate, you can target improvements that bring the lowest standards up to the level of the best.
Net promoter score is quick, easy and low cost to measure
It’s hard to see how NPS surveys could be any simpler. Certainly, there are significantly more complex ways of eliciting customer feedback and conducting market research.
The simplicity stems from the single NPS question at the heart of NPS surveys. This format also makes NPS surveys very lightweight and non-disruptive for customers to engage with and respond to. This in turn leads to higher response rates and results that you can count on to be representative and unbiased. Being quicker to complete provides you with real-time data to inform real-time decisions. And because that single, simple question stays constant, the results you get remain very reliable over long periods of use.
NPS is the springboard for deeper intelligence
NPS surveys work on an individual level, giving you a snapshot of how a customer views your business, brand or product. This value multiplies exponentially when you aggregate results across large numbers of customers, and track this over time.
You can also learn more about customers by using their response to NPS surveys as permission to ask follow-up question/s. This is a great opportunity to gain deeper insights to reveal the reasons why customers think the way they think. Knowing why someone has a low or high propensity to recommend you is surely at least as important as knowing that they do. Use these results to influence operational and product/service changes across the board. Whatever you do, don’t just measure feedback… understand and act upon it!
NPS is the best ‘like for like’ customer metric
The raison d’etre of NPS is to deliver a proven, repeatable and dependable measurement upon which you can base important decisions. The results you get are peculiar to your organization, and – used correctly – can be applied for your exclusive benefit.
The comparability of NPS is of great value from day 1 of your NPS measurement journey. This is when you take your first readings from your first NPS survey outreach and calculate a benchmark NPS score for future comparison. You can also use this benchmark to compare against competitors or, ideally, the very highest NPS achievers with reputations for outstanding great customer experience and loyalty. You’ll find that many organizations regularly publish their own NPS scores online.
The open, comparable nature of NPS also means there’s no stopping third parties from asking your customers to rate your organization on the NPS rating scale. In fact there are independent researchers that regularly poll thousands of consumers to calculate industry NPS benchmarks.
How can I convince my company to start using the Net Promoter System?
Getting management or board signoff to start tracking NPS should be straightforward. Achieving this buy-in at a high level in the organization is important because it can make a big impact. It’s also necessary because it involves engaging with customers.
In terms of a business case for NPS, the keys aspects are:
- Internal costs of setting up and managing the tracking process
- Ideally, this will be kept to a minimum by following best practices and implementing third-party software with automated integration to existing systems.
- Costs of third-party NPS tracking software
- Customer Thermometer is a great example of software ideally suited to NPS tracking.
- Potential gains to be achieved in revenue and profitability by understanding customers better in order to improve service and experience.
Present all the benefits of NPS alongside your business case. In particular, you may find senior decision-makers influenced by how NPS enables the business to see how well it’s doing against competitors.
Tracking NPS is both inexpensive and insightful. However, it is critically important to achieve buy-in for acting upon the insights uncovered – not just tracking. Simply tracking NPS gives you a KPI and nothing more. NPS analysis and action are key.
Set Up Your Free NPS Program Today Create a free Customer Thermometer account (No credit card required – Fully functional account). Set up an NPS survey and discover why over 10,000 teams choose CT to track, measure and improve their NPS program.