Using Net Promoter Score in your business strategy

What is Net Promoter Score (NPS)?

NPS is a measure of customer advocacy for your business, product or service.

It is frequently used as a proxy for customer satisfaction.

How do you measure and calculate NPS?

NPS is measured by asking customers one simple question: "How likely is it that you would recommend [brand] to a friend or colleague?" Answers are provided as a score from 0 to 10. 0 indicates "Not at all likely", and 10 represents "Extremely likely".

Based on their response, customers are then divided into three groups:

1. 0-6: Detractors
2. 7-8: Neutral
3. 9-10: Promoters

The final score is calculated by subtracting the percentage of customers who are detractors from the percentage of customers who are supporters.

Scores can range from -100, where all customers are detractors, to +100, where all customers are promoters.

What NPS is not

NPS is an extremely valuable indicator of the health of a business. Its widespread adoption also makes it a useful for benchmarking. It is easy to compare NPS scores across businesses and even across industries.

However, it is not particularly strategic. This is because:

1. It provides no indication of what the organisation is doing to achieve its score.
2. It is completely generic and does not capture the extent to which the brand is differentiated in the market.

And so, whilst I do advocate the all organisations should use it, I also also advocate that they should supplement it with other more strategic customer indicators.

Some tips for using Net Promoter Score

Despite its simplicity, it is still possible to use NPS badly.

So here are five tips for using it well.

1. Ask the NPS question as a single question, on its own, as close to the point of interaction as possible.

If possible, build the question right into the product or service. That way you get what they really feel while actually using your service. Not some half-remembered feeling which has been clouded by everything they've experienced since your product.

This is relatively easy to do if your product or service is digital. But it can also be achieved using some sort of simple terminal as customers leave your premises, or by follow-up email or text.

The further you get from the point of use, the less value you will get. Organisations who collect NPS as part of an annual customer survey tend to the get the least value of all.

2. Make it as easy as possible for the user to answer the question.

The simplest solution is to  present them with a series of round buttons labelled 0 to 10 with labels at the extreme ends of the series. The customer simply clicks on a button and it's done. No 'confirm' or 'submit' button is needed.

Even if you make it that easy, some people either still can't be bothered or will prefer not to answer.

3. Ask supplementary questions judiciously

NPS offers no explanation for the score.

So it might be useful to ask follow up questions. These can be tailored to the score they've already provide.

Most importantly, the original NPS score should be registered regardless of whether or not they are asked or answer any follow up questions.

4. Link the NPS answer to your unique customer identifiers

This enables you to segment your customer base by various other criteria and see if the NPS score varies between segments. (You obviously need to be careful to consider the statistical significance of any variations.)

5. Ask it about once a year

If your customers use your product or service repeatedly (which you probably hope they do!) don't ask them for an NPS score every time they do. About once a year should be enough. You might consider asking them more frequently if you notice a significant change in their usage pattern.