Net Promoter Score System “101”

Because I am presenting in class tomorrow about this topic, I thought about sharing what I learned.

Basically, the Net Promoter Score (NPS) measures the loyalty that exists between a provider and a consumer. The provider can be a company, employer or any other entity. The provider is the entity that is asking the questions on the NPS survey. The consumer is the customer, employee, or respondent to an NPS survey. It mainly serves as a tool for measuring a company’s word of mouth customer satisfaction.  The Net Promoter Score (NPS) system has been used in many sectors including but not limited to; airlines, car rental businesses and internet service providers.

the-pros-and-cons-of-net-promoter-score

One of the advantages of NPS is its simplicity.  Often times customer service measurements are based on complicated formulas and long surveys.  It is challenging to obtain thoroughly completed surveys from customers.  NPS is just one simple question, “How likely are you to recommend our company/product/service to your friends and colleagues”?  Additionally, NPS is a more simplistic knowledge that can be understood by everyone.

The one thing I like about NPS is it is intuitive and easy to understand by everyone in the company. Think about it logically; happy customers buy more and spread the good word about your company while unhappy ones buy less and complain more. So if you increase happy customers and reduce unhappy ones, your business will grow. If your business has happier customers than your competition your company will grow faster than your competitors, which is good. Very logical! Often companies are deterred from measuring customer satisfaction or loyalty because so many theories abound they don’t know where to start, so companies shelve research even though they know it is important. NPS is something anyone with access to email and a spreadsheet can set up and measure.

Some researchers argue that this method is too simple. The Net Promoter will say that measuring one number alone will not lead to success and will supply customers with an operational model, white papers, online forums, webinars and even conferences to get you to a successful score. But one number isn’t enough, critics argue.

Look forward to presenting tomorrow!

Sources:

Fred Reichheld “The Ultimate Question”, (Harvard Business School Press, ISBN 1-5319-783-9)

The Ultimate Question—A Disruptive Concept – Jay Curry

Advocacy drives Growth – Customer Advocacy Drives UK Business Growth – Dr P Marsden, A Samson, N Upton

Customer Satisfaction Strategy – White paper – The Pros & Cons of Net Promoter Scorehttp://www.customersatisfactionstrategy.com/netpromoterscore.html

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2 Responses to Net Promoter Score System “101”

  1. sydhavely says:

    What jumped out to me in your presentation is how Comcast ties bonuses across the organization to the NPS target. That makes everyone have skin in the game. Same for corporate reputation. It can’t be a single person”s or department’s responsibility. Well done, Marty.

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