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Net Promoter Score: What Is It, Anyway?

Erin Ollila
February 28, 2020

3 minute read

Gaining information from your customers about what’s working, and what’s not, is invaluable. Yet, gleaning customer insight for your business can be difficult. And worse, many methods of data collection are burdensome on consumers. Who has the time sit down and answer a lengthy questionnaire about their overall sales experience?

Yet, organizations still rely on customer data to improve systems and create a better customer experience — so what are they to do if they don’t know how their customers feel?

Enter Net Promoter Score® (NPS®).

What is Net Promoter Score?

NPS is a survey that measures customer experience (CX). The results from these surveys help organizations measure the potential for business growth.

Created in 2003 by Fred Reichheld, a partner at Bain & Company, NPS gathers insights about customer loyalty which businesses can use to improve CX and facilitate organizational transformation.

In an interview for this article, Kate Swanson, manager, CPA, CVA for Wilson Toellner CPA, explains, “The NPS survey is used to gauge how well we are doing at creating a great customer experience, and what we need to do to improve our customer experience.”

An NPS survey asks one important question to the customer: “How likely are you to recommend our product or service to a friend or colleague?”

The respondent can then answer by choosing a number on a scale from 0 to 10, with zero being “absolutely not likely” and ten being “extremely likely”. Respondents who choose 9 or 10 are considered promoters. Those who choose a 6 or less are called detractors, and respondents who choose a 7 or 8 are labeled as passives.

To get to the score part of the NPS, organizations subtract the percentage of detractors from the percentage of promoters, leaving them with a score in the range of -100 to 100.

Leveraging NPS data

In an interview for this article, Joy Levin, President of Allium Research and Analytics, reports that organizations have two options to leverage the data captured.

She says, “The best way to use a Net Promoter Score is to observe how your score changes over time; to use it as a benchmark for your company alone and to observe the impact that any changes you make (e.g., in product, customer service, marketing, operations) affect this score.”

Levin continues, “The Net Promoter Score can also be valuable when used in conjunction with segmentation. Once you create segments that are meaningful to your business (e.g., demographics such as age or income for organizations that sell to consumers, or job title or annual revenue for those which sell to businesses), you can compare the Net Promoter Score according to these segments. This analysis can highlight specific groups which view you more or less favorably, enabling your company to target its efforts with greater efficiency.”

NPS in real life

Unsure of how to use an NPS survey in your organization? There are many different touchpoints to allow your customers to share feedback.

Swanson says, “We include in our email signature, a link to the NPS survey, so at any time, a customer can let us know how their experience is. We also have built an NPS survey into our customer onboarding process. We send an NPS survey to our customers 3 – 4 months after beginning a relationship with them and then annually beyond that. This helps us know how our work is perceived by the customer, and we know early on in the relationship if we need to make changes to improve their experience.”

It’s easy to see how learning from customers helps to improve their experience, but this data also plays a role in organizational transformation and employee engagement. For example, the more “promoters” an organization has, the better the outlook. The better the outlook, the happier the employees.

Footnote: “Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.”

Don’t stop there! There’s a lot more to learn, including:

 

Erin Ollila
Erin Ollila believes in the power of words and how a message can inform – and even transform – its intended audience. After a 12+ year career in human resources, she's jumped headfirst into digital strategy. Erin is a geek for SEO and all things social media.
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