NPS Net promoter score Business strategy Formula promotion marketing scoring

An Overview of Net Promoter Score (NPS): Guide and Definition

What is a Net Promoter Score (NPS)?

Net Promoter Score (NPS) is a measure of customer loyalty in the contact center captured through post-engagement surveys. It is based on customer answers to the question: How likely is it that you would recommend our company/product/service to a friend or colleague? Co-developed by Bain & Co. and NICE Satmetrix, NPS categorizes and enumerates percentages of customers, calling them Promoters, Detractors or Passives. Promoters are loyal enthusiasts who buy from the company and urge their friends to buy, according to Bain’s descriptions. Passives are satisfied, but indifferent. Detractors are unhappy customers. The NPS Score forms the basis of a system that focuses a company on customer loyalty through customer and employee relationships. It works as an echo chamber for defining cultural values, has influence over core economics and it commands a strategic commitment from top executives down through the ranks. Beyond the composite score, the underlying elements provide context for the overall rating. Companies analyze the comments to determine whether they can make improvements.

How to Calculate Net Promoter Score

A simple explanation of measuring Net Promoter Score: Customers answer the question (How likely is it that you would recommend our company/product/service to a friend or colleague) with a number in the range of 0 to 10, with 10 representing most likely. Values are assigned to Promoters, Passives and Detractors.
  • Promoters: 9 to 10
  • Passives: 7 to 8
  • Detractors: 0 to 6
To calculate NPS Score, the percentage of customers who are Detractors is subtracted from the percentage who are Promoters. In a given period, Net Promoter Scores can range from -100 (all Detractors) to +100 (all Promoters).

What is a Good Net Promoter Score?

A good rule of thumb is that a NPS score higher than 0 is considered good; higher than +50 is considered excellent; more than 70, world class. A more relevant comparison is your organization’s placement against its peer group benchmarks. Industry and competitor NPS scores compared with yours can reveal contextual information about how your company’s scores stack up. If your numbers are higher than industry or competitive scores, that is a positive. Lower scores indicate the industry or competitors are performing better in their Net Promoter Scores than your company.

How Do Net Promoter Score Benchmarks Work?

Evaluating your company’s Net Promoter Score is best done in context. Benchmarks that provide comparisons against which you can measure your company’s scores are compiled in categories including the industry and your competitors. NPS Co-developer NICE Satmetrix is one of a number of organizations that compiles industry NPS averages and other company data on NPS. Comparing your NPS will demonstrate whether your company is outperforming or underperforming your peer group, the industry or your competitors. Using this information your organization can make the adjustments necessary to alter the customer experience to drive results.

What is an Example of Net Promoter Score Question/Survey?

Net Promoter Score is based on the answer to one question. The question posed to customers is: “On a 0 to 10 scale, how likely is it that you would recommend our company/service/product to a friend or colleague?” The rating scale allows the respondents to be categorized as Promoters, Passives and Detractors. The primary NPS question may also be supplemented with a second question or more that can be as simple as ‘Why?’ The added questions are usually designed to reveal the reasons behind the customer’s initial rating. The supplementary questions allow companies to collect data that can be used as part of their system to identify and analyze opportunities to make improvements in the operation. Other questions might be built around the specifics of the transaction, such as: Was the individual you contacted professional? Or, did the product meet your expectations?

Are There Different Types of Net Promoter Scores?

NPS can be characterized based on how the survey underlying it is used. Transactional NPS is collected through surveys that are taken after each transaction. A Relationship NPS is a survey that may be taken periodically – annually or quarterly, for instance – to measure the customer’s relationship with the company. It’s almost a proxy for organizational goodwill beyond the transactional element mentioned above. Medallia, the customer experience management company, is among companies that also use NPS within a larger operating context. Implementation of the surveys is designed to drive a continuous improvement process. It seeks to define processes, services and programs designed to implement the surveys and establish processes to turn the results into improvements and, ultimately, better NPS numbers.

Medallia Net Promoter Score

Medallia is a customer experience management company that can enable contact center managers to measure and monitor Net Promoter Score. The company provides an NPS program that can integrate your NPS data with your CRM as well as high-volume surveying and real-time reporting. The system allows customer follow up plus identification and prioritization of improvements in its planning features. According to Medallia, their Net Promoter Score lets companies measure the effectiveness of their improvements and the impact on the bottom line.

Cisco Net Promoter Score

Automated systems, such as Cisco Unified Contact Center Enterprise, can be configured to measure and allow managers to monitor Net Promoter Score and other metrics. Through the Cisco UCCE, two types of surveys can be produced via email, post chat and phone. The phone surveys are set up through the system’s IVR (interactive voice response). The surveys can be either binary, capable of recording a yes/no or numerical answer. Or, they can be freeform, allowing the voicemail system in the IVR to record the customer’s comments. The phone surveys are based on the system’s IVR. The surveys can be scored in-system and are written to a database.

How to Implement Net Promoter Score in Your Business

Setting up a Net Promoter Score system in your business is a process that goes well beyond simply asking the single NPS question. Executives, managers and front-line employees must all be onboard to make the system effective. You should determine if you will implement NPS with in-house resources or seek the expertise of a provider, such as Medallia. Here are 5 areas to consider when implementing NPS:

1. Seek buy-in from all levels, starting at the top

  • Determine who will be accountable for shepherding implementation of NPS.
  • Establish the process for NPS, from creating survey questions to determining how improvements in the company will be implemented.

2. Create the survey questions

  • Include the NPS question, On a 0-10 scale, how likely is it that you would recommend our company/product/service to a colleague, family member or friend?
    • Determine whether NPS will be transactional or relationship based; how and when the survey will be delivered and to whom.
    • Devise secondary questions, which at the least should determine what led the customer to their NPS rating.

3. Measure and analyze NPS

  • Determine what tools are needed to collect, calculate and report NPS and whether they are already in-house or they must be acquired.
  • The process should be established to read and analyze customer comments to additional questions, potentially including: What about your experience did you enjoy or not enjoy? Did the Brand Specialist resolve your transaction in one contact? What would you suggest as an improvement in the experience you had?

4. Prioritize and implement improvements

  • Immediately address any NPS comment that indicates an unhappy customer, both in-house and with the customer.
  • After comments are analyzed, determine what process or system changes will be pursued first and how the change will be implemented.
  • Add relevant changes to the quality assurance scorecard.
  • Coach Brand Specialists in processes, skills and techniques required in the new process.

5. Measure effectiveness of improvements

  • Determine how you will measure success of improvements, starting with changes in your NPS score.
  • Publish results regularly to the team.
  • Publish individual results to each Brand Specialist as feedback.
Once you have implemented an NPS system, follow its progress to ensure that it’s effectively reflecting customer experiences and feeding the continuous improvement process. Communicating progress of improvements to the team should help perpetuate the buy-in that was necessary to begin the comprehensive NPS process. The system should be continuously updated to incorporate changes that result from customer response.
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