Per chi ancora non lo conoscesse, una breve ma chiara descrizione di cosa sia l’NPS (Net Promoter Score). Amato ed odiato, resta comunque un KPI importante e di grande rilevanza per molte aziende, anche in Italia.

Net Promoter Score, or NPS, has been with us quite some time. It was first developed by Fred Reichheld back in 2003, following an article published by Reichheld in the Harvard Business Review, outlining his new NPS concept.

As its basis, Net Promoter Score can run on a scale from -100 to +100, and is generally regarded as being a fairly decent KPI for measuring overall customer sentiment. Whole bodies of research have shown that overall, a higher NPS score will result in more satisfied customers, and a corresponding increase in revenue. However, this is not really sufficient to start leveraging the full power of Net Promoter Score, we need to take a look at how actual customers, within the NPS scale, are positioned.

To do this, we can simply break the scale down into three segments. These three segments are promoters, passives and detractors. How does this work? Well, let’s take a very simple NPS driven question within a customer feedback survey as an example:

“How likely are you to recommend the company to friends, family and colleagues?”

This question would be a scalable answer question, allowing the customer to respond with a value from 0 to 10. By taking the answers to this question, we can start to segment customers thus:

• Promoters – people who responded with a 9 or 10.
• Passives – people who responded with a 7 or 8.
• Detractors – people who responded with a 6 or lower.

So what does this kind of segmentation of customers based on Net Promoter Score give us? How do we define each segment? We define them thus:

• Promoters – these are the people that are already extremely loyal to the company/brand/product. They will most usually remain loyal customers, and spend an increasing amount upon additional products or services. They are also very likely to introduce new customers via word of mouth.
• Passives – these are the people that are happy overall, but they are not as loyal as those who fit into the promoters segment. For example, they may still chose to leave the company for a competitor should they be provided with a good offer. So whilst passives are relatively loyal, increasing their NPS score has benefits.
• Detractors – these are the people that are unhappy with the company/brand/product. This is the dangerous segment. Not only are detractors more likely to churn, they are also more likely to offer negative feedback to their peer group. Where promoters can deliver new customers via word of mouth, detractors can scare those new customers away with their negative feedback. Obviously, raising the Net Promoter Score for detractors has some pretty major benefits.

Now, once we have the final tally from all customer feedback, we can work out the company’s overall NPS score by taking the percentage of promoters and subtracting the percentage of detractors.

NPS – The Good

As we mentioned at the beginning of this post, Net Promoter Score was developed around a decade ago. Therefore, it is one of the most widely understood KPI for measuring customer sentiment. Plenty of research over the last 10 years has shown how companies that have sustained a good long-term growth rate, have an overall NPS score that is at least twice that of average competitors.

NPS is a KPI that is easy to understand, and this makes it simple to incorporate Net Promoter Score into corporate culture. Employees that are paid bonuses based upon performance can grasp the concept of NPS almost instantly, and decision makers similarly find it very easy to use NPS as a strategic decision making tool.

NPS – The Bad

The major downside of using Net Promoter Score to drive and measure the customer relationship, is that it does not provide a way to capture detailed customer knowledge by touchpoint. In effect, this is where the simplicity of Net Promoter Score works against it. However, this shortcoming can be overcome by bringing in a second KPI such as Customer Effort Score (CES), and correlating both KPI.

By Mac Wheeler