NPS

Net Promoter Score 

Net Promoter Score, or simply NPS was created by Satmetrix in 2003, as a tool to measure Customer experience. It has since become one of the most well recognized and trusted indicators of Customer experience, and one of the few true gauges of Customer growth and Customer Churn. 
 
NPS is the formulated result of the would you recommend us to your friends of family question. 

Many companies capture NPS but fail to achieve it's full potential. In this section you can find everything from the basics to how to turbo charge your NPS program.  
The NPS Question

"Would you recommend us to your friends and family?"

By asking Customers this simple question you measure what their head is thinking and what their heart is feeling. A Customers  head will think about, the service received, the product features, the price they pay; and their heart will consider how well you know them, if they are listened to, and if their values are shared; this allows NPS to measures loyalty and not just Customer satisfaction. 

The NPS question should be defined a mandatory, ensuring that it is always completed.  

Survey Scale

In order to get a true Net Promoter Score you must use a Zero to Ten scales, where Zero is Definitely would not recommend, and ten is definitely would recommend.  Some cultures prefer to have the scale from ten to zero rather than from zero to ten. Either way is fine, it's just important to note that changing the scale after your NPS program is up and running could cause a trend break. 

Behind the scenes the NPS scale is divided into three: 


Scores from Zero to Six are classified as Detractors, Sevens and Eights are Neutral, and Nines and Tens are Attractors.


This split will be used to calculate your Net Promoter Score and should not be shared with your Customers., because it could influence their scores. 
The Formula

In order to calculate NPS you first take the total number of Advocates, and subtract the number of Detractors, then divide the answer by the total number of responses and times it by 100. 

(Number of Advocates — Number of Detractors) / (Total Number of Responses) x 100

An NPS can range from -100 to +100; with -100 indicating that none of your Customers would recommend your company, and +100 indicating that all your Customers would recommend your company. 
Types of NPS Surveys

The two main types of NPS are Transnational and Relational.  There are other types of NPS such as Product, Brand, and Virtual, which I will cover in future blogs. 

Transaction NPS Surveys, commonly known as tNPS, capture the NPS data directly after a Customer has interacted with your company.  The points at which the Customer interacts with your company are known as Touch Points. You can define as many touch points and have as many different types of tNPS surveys as you desire, some typical touch points are:  Buy, Install, Pay, Help, Change, and Exit.  

Conducting tNPS surveys at different touch points, allows you to easily identify pain and triumph points, as well as giving you the ability to map your Customer's journey from start to finish. In order to get an overall tNPS result all you need to do is simply combine the figures and calculate the NPS as normal. 

Relational NPS Surveys, known as rNPS, are intended to capture an unbiased view of your company, and are not linked to a transaction. Ideally these surveys should be sent to a random sample of Customers who have not had any interaction with your Company for at least 3 month. 

Internal and External influences impact Transaction and Relation NPS in different ways. Transaction NPS is far more volatile with factors in some case showing instantly in the results. For instance bad weather can cause satellite TV disruption, which triggers Customer to call, which in turn triggers a tHelp survey and a likely increase in negative responses.   

rNPS on the other hand is only sent to those Customers who have not had a recent interaction, therefore significant influences can and often do have a delayed and less volatile impact. 
How to survey your Customers

One of the best way to survey your Customers is via an online survey, either built directly into your website (often know as intercept surveys), or by sending email invites. There are plenty of companies providing this capability, from the the free (but limited) Survey Monkey, to the all encompassing services of Medallia. 

Email surveys tend to give you more honest feedback than surveys carried out with a human interaction, such as face to face or over the phone. These type of surveys tend to be more positively biased, because Customers often feel reluctant to complain or give detailed answers when questioned in this manner. The industry standard response rate for email surveys is between 10% to 20%. 
Methodology

It's important to define your NPS methodology from the very beginning, and stick to it as rigidly as possible in order to build trustworthy data. Your Methodology should define:
  • How surveys will be carried out and the % split if multiple channels are used. 
  • The types of surveys being used.
  • When surveys are to be sent.
  • To whom they should be sent to.
  • Quarantine rules - in order not to over survey your Customers. 
  • The order of your questions. (your survey is likely to contain other questions such as CSAT) 
  • Your Close the loop process
The Results

With your Methodology defined and surveys sent, you should now be receiving responses. In order to get a statistically accurate Net Promoter Score you need at least 100 responses. From 100 to 300 responses the margin of error is +/-6 points, so the more responses you can get the better. 

If you don't have sufficient surveys for a statistically accurate weekly or monthly NPS you can consider extending the period until you have enough responses. 

Your initial results will give you a snapshot of how your Customers perceive your Company, overtime you can identify trends and the see the impact of changes you have implemented, and outside forces, such as seasonal fluctuation, or competitors campaigns. 
Target Setting

Before you can set targets you need to obtain a decent amount of baseline data. Once you have this you can assess how past factors influenced your scores and plan your targets accordingly.  For instance if a price increase you did last year reduced you NPS score by 10 points, it is likely to have a similar impact if done the same way in the future. 

I advise against setting Employee targets as this can lead to Employees gaming the system in order to achieve the desired target, resulting in tainted, untrustworthy data. More about this in future blogs. :) 
Voice of your Customer (VoC)

In addition to asking your fixed zero to ten questions, it is important to allow your Customers the chance to express themselves freely. 

Follow your NPS question, with an open question and text box, asking the Customer why the gave the score they did. In most cases you only need one text box per survey, because most Customers will write all their points at the first opportunity, and are likely to leave subsequent boxes blank. 

Bench-marking 

Bench-marking against your competitors can be challenging, mainly because even if they are conducting NPS surveys, they are unlikely to openly share their results.  One way to obtain competitors data is to conduct your own competitive bench-marking by surveying a random sample of people in your chosen demographic.  

Luckily there many companies who can help you with this, and who are also happy to share industry standards, as well as specific scores from companies who are open to sharing their results.  One such company is npsbenchmarks.com who will not only carry out bench-marking for you but also shares top companies data.
It is also important to note that the NPS for different industries can vary significantly. The Temking Group, have kindly provided an overview of the ranges by sector, which can be downloaded here. 
WoM (Word of Mouth)

Word of Mouth Marketing ties nicely in with NPS, as it is all about getting your Customers to (hopefully positively) talk about you.  WoM has evolved over time and is becoming more and more important. Customers no longer need to actually meet someone to tell them about their experiences, instead they can share their thoughts via social media, online reviews, blogs, youtube, and forums. 

NPS is a good indicator as to whether Customers are talking about you in a positive or negative way. Do something great and people may share it, do something terrible and people will share it! 

In a study carried out by Lithium they identified that 92% of people trust recommendations by friends and family, and between 20% to 50% of purchases are a result of WoM. 

One way to get your Advocates to talk about you is to introduce a Member get Member (MgM) program which rewards Customers when they introduce a friend to your company. More about this in future blogs. :) 
Influencing your results

There are many factors that can influence your NPS, and it's important to know that changing your methodology can cause trend breaks without their being any positive or negative changes to the way your Customers perceive your company.

Getting things wrong, or carrying out certain activities such as price increases can easily have a negative impact on your NPS. Improving your NPS takes time and there is usually a lag between implementation and seeing its impact. in the section Turbo Charge NPS, I look at many ways on how to improve your results, and how to get the best out of your NPS program. 
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