Net Promoter Score: The Ultimate Question

Thumbs Up, cheering approvers in an NPS survey

I swiped my debit card and stared at the tiny screen…

I expected a prompt for my PIN. Instead, the monitor read, “How likely are you to recommend K-Mart to a friend”?”

This caught me off guard. K-Mart wants to know if I LIKE them? Not only that, they want to know if I like them enough to TELL someone ELSE I LIKE them? That’s actually kind of cool. And I said to myself,

Net Promoter Score has arrived at the K-Mart cash register!”

If you haven’t heard much about the Net Promoter Score (NPS), that’s likely to change this year. More and more businesses are using NPS to take the pulse of their existing customer base. The premise of a Net Promoter Score is actually fairly simple: To figure out your NPS, you take a set number of customers and ask them one question:

On a scale of 0-10, how likely are you to recommend us to a friend or colleague?

You then track the results like this:

  • People who respond with 9 or 10 are Promoters: They are crazy about you and evangelize you.
  • People who respond with 7 or 8 are Passives: They offer neither “shout out” nor “smack talk.”
  • People who respond with 6 or lower are Detractors: They just may speak poorly of you to others.

Net Promoter Score, via http://renps.com

To figure out your NPS, you drop the passives and then subtract the percentage of detractors from the percentage of promoters. Like this: NPS = %Promoters – %Detractors

So what is a GOOD score? Well, that can depend on your industry. For example, the top NPS score for a computer hardware vendor in 2010 was Apple at 78%. By contrast, BlueCross BlueShield of Illinois had a score of 5%, but this was the HIGHEST among all Health Insurance companies.

So why am I telling you all this? Well, at this moment, I’m typing from the Net Promoter Conference in Miami. And I am excited about how much opportunity there is to listen, respond and improve.

I am excited to learn even more about the close correlations between NPS scores and profitability. I’m looking forward to understanding why so many companies are in Denial about how their customers feel.

There is much to learn and much to share, on our common quest to ably serve our customers. If you have a story to tell about an NPS success or an NPS fiasco, I’d LOVE to hear about it here.

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10 Responses to “Net Promoter Score: The Ultimate Question”

  1. Hi Tristan,

    Probably, companies should also look into how many people ‘actually’ recommended their product, and how many people actually bought the product on a recommendation.

    Thanks for writing such wonderful articles, it is always a pleasure to read them.

    -Hemant

    • Thank you so much Hemant,

      Yes, with social media monitoring, brands can move beyond asking if a customer WOULD recommend them into seeing whether or not they actually HAVE done so. And as Social CRM becomes more widespread, it will be possible for brands to determine the chain of events that lead to a high percentage of purchasing decision.

      I appreciate your kinds words and support!

      Tristan

  2. Safelite AutoGlass has been able to successfully use NPS as a catalyst for a cultural transformation, improving business processes and employees’ customer focus.

    Importantly, NPS isn’t just a way to measure results, it’s a way to drive change through inspiring employees. Our NPS score is accessible to all of Safelite employees in real-time, any time, via our Intranet. And, technicians review their personal scores weekly with their managers to highlight strengths and discuss areas for improvement.

    As a result, our NPS is usually in the high 80s, and our sales have improved each year, right along with our NPS score.

    The concept of K-Mart asking the ultimate question on the spot is interesting. My understanding is that NPS scores drop the longer you wait to survey… do you think perhaps this instant gratification could lead to score inflation?

    • Fantastic hearing about your program and hard-earned results. I hadn’t heard of weekly personal scores, but I guess it’s a clear and easy was for everyone to understand exactly where they stand.

      I hadn’t thought about instant gratification and score inflation before now. As a consumer, If I’m going to respond, I’d prefer to do it while I’m there. But the simply numerical feedback for in the POS console doesn’t let me leave comments.

      I got an email tonight from a costume company for a kids outfit we bought in 2009! Either they have a process glitch or they have an absurd strategy. Needless to say, I could barely remember the item.

      I have to learn more about data trends, but I’d presume surveying closer to the interaction may bring better accuracy? Not sure. Maybe I’ll learn tomorrow? (One more day at the show)

      Appreciate your comments!

      Tristan

  3. Tristan,
    I’d really be interested to hear about your additional learnings and perspective after the conference. I will admit, i’m not a fan of NPS. I’ve studied the methodology for a number of years, many clients have implemented it and (shhhh….) we currently incorporate it into our post interaction surveys. Here are the two issues I have:

    1) the model itself is flawed. To explain why I think this would require a dissertation, not a blog comment. But in short, the question doesn’t go far enough. “how likely would you be to recomment” tells you nothing about what the consumer actually does in the future. It measures potential articulated intent, not actual behavior. And it doesn’t even measure actual intent. It also doesn’t give any insight as to why a customer would be likely to recommend or not. NPS doesn’t go far enough. It also needs to say “will you recommend” and “Have you recommended”. But even then, it does not tie back to any financial metric such as actual repurchase behavior or overall revenue. NPS creates no actionable information.

    2) Because NPS appears (appears is the operative word here) to be simple relative to complex statstical analysis, it has been over emphasized and the original approaches laid out by Mr Reichheld have been diluted. The appearance of simplicity has given businesses a false sense of accomplshment that they are actually listening to their customers. Reichheld is a master at board room communication. That’s his job as a strategy consultant. So, the apparent simplicity of NPS resonates with his C-level clients. The trap this causes is that again it produces nothing actionable at the levels in the organization that actally have to drive improvement and change in the customer experience. NPS also suffers from the “everybody’s doing it” management flavor of the weak (intentional spelling). If NPS had a tag line, it might be something like “NPS – just do it and your customers will love you”

    Hope you’ll try to change my mind.

    • Thank you Barry,

      A very well thought out comment indeed. I don’t yet know enough detail to provide a proper response, but I may by tomorrow.(I get to hear Mr. Reichheld speak tomorrow. There’s also a session on action planning.)

      I will say this: Social Media Monitoring, with a robust backend SCRM implementation, could give us insight into who actually DOES recommend. And if we tie this to NPS responders, we can add a layer of data that shows what percentage of those who claim they would recommend actually have done so.

      That would be cool, and it certainly seems possible within less than a year. Something I’m pondering.

      Thanks for your very articulate food for thought! Much more to discuss as the year unfolds.

      Tristan

  4. Would be cool if FourSquare allowed a NPS while checking in to a venue. Seems to me that would be valuable to the store and potential customers.

  5. It’s hard job talking to the converted, but can I try and state a counter view : )

    If you’re convinced NPS can add value to your business, then you need to read this post:

    http://blog.everythingdesign.co.nz/net-promoter/

    This quote by researcher Tim Keingingham seems to draw a line in the sand for me with regard to the merits and validity of NPS, ”There are several scientific papers (two of which I co-authored) that conclusively demonstrate that the claims made by Reichheld regarding Net Promoter’s linkage to growth and customers’ future loyalty behaviors are false.”

    I’ll say no more!

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    […] This post was mentioned on Twitter by Jen Reyna, Melina, Tristan Bishop, Jaime Fitzgerald, Tristan Bishop and others. Tristan Bishop said: What’s The Ultimate Question? A new blog post on tracking customer loyalty: http://t.co/RMIISoE #leadbiz […]

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