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.

5 critical success factors for strategy execution

Many strategies fail in execution. These critical success factors will ensure that your strategy is not one of them.

1. An Integrated Strategy with Clear Goals.

A good strategy describes the why, the what, and the how. These are tied to specific, quantified business outcomes. It is communicated in clear and concise language that everyone in the organisation can understand and relate to.

Most organisations of any size go on to have an IT strategy, and HR strategy, a Marketing strategy, etc.

These should answer the question:

• "How will we use IT, etc. to deliver our strategy?"
  and not:
• "What is the strategy for our IT department?"

This is a subtle but important distinction in achieving alignment.

In the video in this post, Michael Porter argues that strategy must be integrated. Organisations with "an IT strategy, an HR strategy, etc." are less likely to have a strategy at all.

2. Leadership Commitment from CEO Through Middle Management.

Leadership should be both engaged and aligned. There is no room for spectators or armchair critics. This includes the often-overlooked middle-management. Ownership and accountabilities should be clearly defined.

Strategy involves making choices. The best strategies result from choices between many attractive options. But this means the honest people might have preferred different choices.

A good strategy process recognises that there is a time to debate those differences of opinion and a time to align behind the strategic choices that have been made. The two should not be confused. It should be permissible for people to say: "That is not the choice I would have made were it up to me, but I accept and will align with that choice." Leaders who cannot align should choose to leave or be told to do so.

Once leaders are aligned, they should use every opportunity available to show this through their words and actions.

3. Deploy the right resources.

Inevitably, a new strategy requires an organisation to do things it had not been doing before.

This requires employees to demonstrate new capabilities and skills. Often times, employees won't have those skills. Or their capabilities in that area may be underdeveloped or even rusty.

To be successful, an organisation must either train its existing people in those capabilities and skills, or bring new people in who already have them.

Unfortunately, in some circumstances, the organisation will have to let people go if they are unable or unwilling to change. Although difficult, that may be for the best. No-one wants to be a square peg in a round hole. Organisations doing so should do so with dignity and support. Those that remain will judge the organisation based on how it treated those that left.

4. Adopt an Agile Mindset.

There are still instances where old-fashioned waterfall management of large programmes remains the only option. But they are becoming fewer and further between.

In all other instances, an agile mindset will fare better.

• Break changes down into their smallest possible components. Sequences and deliver them incrementally.
• Identify and address roadblocks quickly.
• Accept that not everything will go to plan and not all changes will be successful.
• Learn lessons from each success and failure and feed these back into the process.
• Prepare to undo unsuccessfully steps. This will reduce the costs of failure relative to the benefits of the lessons learned.
• Make adjustments to the plan on an ongoing basis. It is not cast in stone.

5. Monitor Progress Towards Outcomes.

It's easy to get swept up in the doing - the execution. However, it is important the organisation tracks not only:

1. Is it doing what it set out to do?
   but also
2. Is it achieving the outcomes it set out to achieve?

Of the two, the latter is by far the more important. And the more often overlooked. It also requires that your strategy was expressed with clear goals in the first place. (See success factor 1 above.)

Progress should be tracked monthly, if not weekly, and reported widely. It should be objective and transparent.

Inevitably, generating, recording, processing, analysing and reporting the data used for such KPIs will take some work. This work should be considered to be at least as important as the work to deliver the strategy itself.

If you're struggling with any of these critical success factors, please contact me for a free no-obligation consultation.