Show related guide
- The Net Promoter Score Guide
- Why Measure Net Promoter Score
- The Net Promoter Score System
- How to calculate the Net Promoter Score
- Net Promoter Score Benchmark
- The Net Promoter Score Survey
- How to use Net Promoter Score (NPS) Questions
- How to track your Net Promoter Score (NPS)
- How to improve your Net Promoter Score
- Employee Net Promoter Score (eNPS)
- How to collect Net Promoter Score
The Net Promoter System, according to Bain & Company, is a business philosophy that commits to customers and employees alike.
With regards to explaining the Net Promoter Score System, we have covered different topics including the Net Promoter Score Scale, Classification of Respondents, and 3 essential components of the Net Promoter Score System.
What is Net Promoter Score Scale?
The Net Promoter Score comes from the simple NPS question -"How likely would you be to recommend our products/services to a friend?"Customers range their willingness of recommendation on the scale of 0-10. Based on their responses, customers will be segregated into three categories.
- Promoters - 9-10 Score
- Detractors - 0-6 Score
- Passives - 7-8 Score
They are those customers who range their willingness of recommendation to 9 or 10 and very satisfied with the kind of customer experience you are offering them. They are the repeat buyers, who recommend you as a brand and your product/service to other potential buyers. They are far more likely than others to remain customers and to increase their purchases over time. Promoters also account for more than 80 percent of referrals in most businesses.
They are those customers who range their willingness of recommendation from 0 to 6 and considered to be very unsatisfied. They are less likely to remain for long and denied to recommend you as a brand and your product/service to other potential buyers. They are more likely to criticize your brand and tarnish your brand’s reputation. Left unaddressed, it would be highly unlikely that they would even return as customers again.
They are those customers whose behavior falls between promoters and detractors. They range their willingness of recommendation to 7 or 8 and moderately satisfied with the kind of customer experience you are offering them. These kinds of customers never spread any negative word-of-mouth, but are not enthusiastic enough to promote your product/service. They may have had moderate experience with your brand but they are ‘passively satisfied.’ They may bring referrals, but may quickly switch to a competitor if needed.
What are the Components of the Net Promoter Score System?
In the book, “The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World”, Fred Reichheld and Rob Markey have explained 3 elemental components of the Net Promoter Score System to thrive in a customer-driven world:
- Strong Leadership Commitment - It is being suggested that rather than focusing solely on the revenue and profit, leadership and executive teams of the companies should target on augmenting customer engagement and loyalty.
- Use NPS as your Reliable Metric - Net Promoter Score is a rigorously tested & scrutinized metric that enables you to check the performance of your product/service and position of your brand in the market.
- Deliver Platform for Improvement - Data collected from the Net Promoter Score are actionable insights that provide you with the complete system to improve the way you work. NPS enables you to immediately address the problems of customers and close the feedback. This, in turn, improves your customer retention rate.
What are the Advantages of Using the Net Promoter System?But why should your business rely on such a simple method? Here are a few of the reason we trust an NPS.
- It is an industry-recognized metric that was incorporated by the leading management-consulting firm Bain & Company, so any business manager using it can be confident of its credibility.
- It results in an easy-to-read number that can tell at a glance what percentage of the customer base is extremely satisfied with the service and performance. In essence, it gives the customer relationship manager an insight into their overall performance of customer retention and acquisition with just a single question.
- Using an industry-recognized numeric can help companies identify their position in the competitive landscape and established players can use their high NPS to set a benchmark in the industry.
- It is easy to implement and interpret, with results from day one. It is a simple out-of-the-box package that requires no experts to set up or analyze.
- Research has shown that NPS correlates strongly with a company’s revenue, so implementing this system in a business can motivate employees to strive for better customer service, and hence a higher NPS.
- By tracking the trend of NPS over time, a company can use this as a proxy for measuring its growth and maturity. A start-up is not well known and will probably have a low NPS while an established player will have a high NPS.