Expert en feedback management - Spécialiste dans la mise en place de baromètre de satisfaction et d'enquête de satisfaction
Expert en feedback management - Spécialiste dans la mise en place de baromètre et d’enquête de satisfaction
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LE BLOG BY SATISFACTORY

11 June 2015
Analyses

Net Promoter Score (NPS) fundamentals



An analysis* carried out by Bain & Company shows that companies that generate long-term profitable growth, such as Apple, Amazon and Zappos, have double the average Net Promoter Scores (NPS). Used by an ever-growing number of companies, particularly as a performance indicator, the NPS is the best known, and also the most discussed, indicator for measuring and monitoring customer satisfaction and loyalty. In a nutshell, here’s what you need to know:

Definition of the Net Promoter Score


The Net Promoter Score, , also called the customer recommendation index is a customer loyalty indicator developed in 2003 by Fred Reichheld, a consultant at Bain & Company and author of the book The Ultimate Question. This indicator measures the likelihood or probability of customers or users recommending a product, brand or service, by asking the question: « How likely is it that you would recommend (company or brand X) to a friend or a colleague? »

The answer is given on a scale of 11 points: from 0 (“Not at all likely”) to 10 ( “Extremely likely”).

From this, three categories of customers can be identified:

The Promoters who give a score of 9 or 10.
They like your company’s products and services. They are the loyal customers of and ambassadors for your brand. They recommend the company’s products and services to other potential buyers.


The Passives who give a score of 7 or 8; also known as the neutrals.
They are quite satisfied, but could easily switch to the competition if the opportunity arose. They probably don’t give negative word-of-mouth opinions, but are not enthusiastic enough about your products or services to promote them to friends or family.


The Detractors who give a score of less than or equal to 6.
They are not particularly enthusiastic about the product or service. They will probably not be inclined to purchase again and could harm the company’s reputation by making negative comments to friends and family.


How is the Net Promoter Score calculated?




The NPS score is an absolute number that can range from -100 (where all customers are detractors) to 100 (where all customers are promoters).

Its main advantages


  • It is a simple and effective indicator that measures improvements in customer loyalty over time.

  • It is an indicator used globally: allowing internal or external comparison, with subsidiaries of the same group, competitors, and other companies or sectors.

  • It is a sensitive indicator that responds quickly and thus makes it easier to interpret the impact of actions taken.

  • Since senior management teams are familiar with this indicator, it’s easy to get all employees on board to motivate an entire organisation to implement and manage a customer-focused policy and take prompt and effective action.

  • Its main limitations


  • It’s sometimes difficult to get operational teams to understand and take ownership of the score. This requires on-going efforts to educate and explain.

  • Recommendation does not necessarily work for all sectors, products or situations, for example, in a monopoly market or in situations where customers have very limited choice. In such cases, the question can be rephrased to adapt it to the sector’s characteristics and the company’s culture. What counts is that the results are correlated with company loyalty and growth.

  • The indicator can be simplistic and hide different realities. Consequently, a score of 15, could be due to having 55% promoters and 40% detractors, but could also be caused by 15% being promoters and 0% being detractors, along with a majority of passive customers. Thus, the NPS alone cannot be used to understand the mechanics of customer satisfaction and can lack precision; it is necessary to put the results into perspective and/or supplement them.

  • Our tips


    1. When the NPS is the sole indicator in your questionnaire...

  • You should add an open-ended question such as, " Why/For what reason(s) have you given this score? " Indeed, the NPS question alone is insufficient to truly understand the reasons for customer satisfaction or dissatisfaction and to identify paths for improvement and drivers for change. A systematic semantic analysis of verbatim comments is therefore necessary to add detail and give meaning to the NPS.

  • Along with the NPS, include the original recommendation percentages (% of promoters, % of detractors, etc.)

  • 2. Use the NPS as one of the indicators in your customer satisfaction survey...

    In addition to overall satisfaction, re-purchase intention or other criteria for measuring satisfaction (expectations, quality, sales relationship, etc.).

    3. Take action

  • The Promoters: Identify your promoters and encourage them to share their experience, for example publicise your referral programmes among your ambassador customers.

  • The Passives: The most unstable part of your customers is more difficult to work on. The natural objective is to turn passives into promoters. This requires getting to know them better and carrying out more research into this group in order to identify what they consider to be a true positive experience.

  • The Detractors With automatic dissatisfaction alerts, you can contact these detractors and take advantage of the opportunity to close the loop (thereby transforming a problem into a success), since the most disappointed customers can often become the most loyal.


  • In conclusion, companies must remember that the Net Promoter Score offers a reasonable, consolidated snapshot of customer satisfaction. However, when analysed in detail and viewed as a state of mind, the NPS can be a powerful performance driver. This is because, rather than being just an indicator, the NPS offers a truly comprehensive approach for companies: by starting with customer interaction, getting employees involved and taking the company to new heights, and by offering ever more positive customer experiences.

    *http://www.netpromotersystem.com/about/how-is-nps-related-to-growth.aspx

    NPS®, Net Promoter® and Net Promoter® Score are registered trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.

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    ABOUT THE AUTHOR

    Sarah RONCERAY
    Sales Manager

    Do you need more information ? Contact the author :feedback@satisfactory.co.uk

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