We all know the power of customer loyalty. But how do you measure it, how do you leverage it, and how do you improve on it? Enter…the Net Promoter Score (NPS). Developed back in 2003, NPS is a customer loyalty metric that seeks to identify a clear and simple customer satisfaction score. The beauty of this simple metric is that it can be used to measure results over time or between industries. NPS can be used to measure the loyalty of customers, community members, and employees.
What is the Net Promoter Score?
To measure NPS, a company creates a simple survey, ideally no more than two questions. The key measurement, however lies in the responses to the “ultimate” question of:
How likely are you to recommend company/brand/product to a friend/colleague/relative?
Responses to this question are given on an 11-point rating scale, ranging from 0 (not at all likely) to 10 (extremely likely). Depending on their ratings, respondents are then categorized as:
Net Promoter Score: PROMOTER
People who respond with a nine or a ten are signaling that their lives have been enriched by their relationship with the company.
They behave like loyal customers, typically making repeat purchases and giving the company a larger share of their spending. They take the time to respond to surveys, and they offer constructive feedback and suggestions. We call this group promoters, because in their energy and enthusiasm that’s exactly how they act.
Companies should work to maintain the promoters’ enthusiasm, and make a concerted effort to recognize and reward promoters. For example, if the NPS was used to measure employees, a company will want to reward their “promoter” teams or individual employees.
Net Promoter Score: PASSIVE
People who give a company a seven or an eight got what they paid for, nothing more.
They are passively satisfied customers, not loyal ones, and they exhibit a markedly different set of attitudes and behaviors. They make few referrals—and when they do make one, it’s likely to be qualified and unenthusiastic. If a competitor’s discount or glitzy ad catches their eye, they are likely to defect. We called this group passives, because they bring little energy to the company and cannot be counted on as long-term assets.
Passives are the category of respondents where efforts to improve may have the most impact. The question a company will need to answer is how can you move a passive to a promoter? Understanding why a respondent fell into the passive category is the first step, followed by identifying workable strategies to move the needle for this group.
Net Promoter Score: DETRACTOR
Detractors are the people who give a rating of six or below. Their scores indicate that their lives have been diminished by their dealings with the company.
Detractors are not a happy crew. They are dissatisfied, disaffected, even dismayed by how they are treated. They may even criticize the company to their friends and colleagues.
Companies confronted with detractors have to probe for the root cause of their disappointment, then apologize and determine ways to solve the problem. If there is no economically rational solution to the detractors’ discontent, then the company must learn not to acquire this type of customer in the first place.
EDWC Net Promoter Score Services
The team at EDWC has worked with companies and communities to design and execute Net Promoter Score surveys and provide analyses and recommendations. We use NPS to help organizations understand why their employees joined them, why they stay and how to encourage employee referrals.
Our deliverables include:
- Graphical report summarizing aggregate survey results and implications for go-forward strategy, including:
- NPS results in aggregate with statistically relevance information (individual company breakouts available as add-on)
- SWOT style presentation of important out-takes / “ah-ha’s” from the analysis…revealing correlations, trends & conclusions
- Benchmark results against comparative data sources
- Summary identification of any root causes discovered (determination if retention is an important component)
- Summary of implications for market strategy
- Identification of (3) targets and messaging opportunities for each
- PowerPoint executive summary
- 2-hour follow up meeting/discussion on findings
Ready to Know More?
If you are ready to discover more about your customers’, employees’ or community members’ level of loyalty, connect with our Net Promoter Score expert, Dan Anhalt.
For more information regarding how EDWC can help your organization, get in touch today.