Introdutcion to Net Promoter Score® and Net Promoter … · Introdutcion to Net Promoter Score®...
Transcript of Introdutcion to Net Promoter Score® and Net Promoter … · Introdutcion to Net Promoter Score®...
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
IntroductiontoNetPromoterScore®andNetPromoterSystem®
Updatedissue:2016
InsightSofa.comisamemberofROUCEKGroups.r.o.
Allrightsreserved|2016
Theaimofthisshortpublication isabasic introductiontoNetPromoterSCORE®,a
methodformeasurementandevaluationofCustomerfeedback.Itwillexplainhowto
measure thismetric,how to calculate it andhow toproject its results to companymanagement.Itsgreatestadvantages(anddisadvantages)willbebriefly introduced
and in the end, the differences between Net Promoter Score® and Net Promoter
System®willbeexplained.
NetPromoter,NPSandNetPromoterScore®areregisteredtrademarksofSatmetrix
Systems, Inc.,Bain&CompanyandFredReichheld.AllrightstothispublicationarereservedforInsightSofa.com.
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
For starters… You'veprobablyalreadyheardthetermNetPromoterScore®.It'sperhapsthemosteffectivemethod tomonitor customer satisfaction,quantify it and integrate it into
companymanagement.Muchof theavailable research showed that thegrowthof
customersatisfactionandloyaltyleadstoademonstrableincreaseinturnoverandtoso-calledhealthyprofits.WhenstartingtotalkaboutNetPromoterScore®,wecan't
beginotherwisethanbymentioningFredReichheld,thefatherofthismethodology,
whichisadoptedeverydaybymanytopcompaniesaroundtheworld.
FredReichheldworkedattheBain&Companyconsultingfirmsince1977.Sincethen
he's been focusing on research of customer satisfaction and customer loyalty inconnectionwiththecompanymanagementandassociatedeconomicindicators.He's
probablybestknownforhisworkonNetPromoterScore®andconsideredthefounder
of thismethodology. Hismost famous book "The Ultimate Question" explains thestrengthofthe"singlequestion"andisasteppingstoneforthedevelopmentofNet
PromoterScore®.Hiscontinualexplorationoftheimpactofcustomerloyalty(notto
beconfusedwithsatisfaction)onthebusinessmodelsofcompaniesawardedhimwithtitles such as "the high priest of the loyalty cult" (The Economist, 2001) or his
appointmentamongthe25bestconsultantsintheworldbytheConsultingmagazine
(2003).
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
NPS as a number (Net Promoter Score®) NetPromoterScore®isextremelypopularinmanyareasofcorporatemanagement:marketing,sales,customerservicecenters, topmanagement-virtually inanyarea.
Especiallybecauseit'seasilymeasurableandtheresultscanbecomparedovertime
orusedinbenchmarkingamongindividualcompanies.
NetPromoterScore® isonlyapart -albeitavery importantandperhaps themost
famouspart-ofthewholetheNetPromoterSystem®.NetPromoterScore®isasinglenumberexpressingthedegreeofloyaltyofcustomerstotheorganization.Customers
areaskedhowmuchtheywouldrecommendyourcompany/product/servicetotheir
familyandfriendsonascaleof0-10.Doesthatseemsimpletoyou?Basically,youareright-that'swhatthemetricisbasedon.Butasweshowbelow,ifyoucombinethis
simple sentencewithadditionalquestions (preferablydependingon theevaluation
score) you'll start getting very interesting data based on actual opinions of yourcustomers.Let'stakeamomenttogobacktoNetPromoterScore®.
Dependingontheratingtheyawardedonascalefrom0to10,yourcustomersareclassifiedintothreebasicgroups:detractors,passivesandpromoters.
Let'stakeacloserlookateachgroup.
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
DetractorsDetractorsarecustomerswhoindicatedtheirloyaltytoyourorganizationbetween0
and6onthescale.Theycertainlyaren'tsatisfiedcustomers.Theyaretellingyouthatafteranexperiencewithyourcompany,productorservice,theywoulddefinitelynot
recommendittotheirfriends.Itisadvisabletotrytoworkwiththesecustomersto
addresstheirbadexperienceassoonaspossible.
Butnothingisassimpleasitmayseematfirstglance.Puttingthecustomerintothe
detractorsgroupjustonetimedoesnotnecessarilymeanthatthecustomerisyourdetractoroverall.Letmegiveyouanexample:
Yourregularcustomerregularlyvisitsyourwellnessstudio.Heusuallyordersamudbathandisverysatisfied.OnedayhedecidestotrytheThaimassagewhichdoesnot
satisfyhimverymuch.Ifyourcallsforasurveyaresetuptoactivatedependingonthe
useofaspecificservicebythecustomer,it'slikelythatafterleavingthemassage,thiscustomerprobablydoesnotgiveyouaveryhighsatisfactionratingandcanbecome
your"short-term"detractor.
Thisexampleshowsan importantcaveat -alwayswatchNetPromoterScore®over
time. If you view the average ratings of a customer (or customers) you'll get an
accuratepictureofyourcustomerloyaltyandtheactualvalueofyourNetPromoterScore®.
Detractorshaveagreatpropensitytoswitchtocompetingservices,stopusingyourserviceorevenspreadnegativemessagesaboutyou.Surveysdemonstratedthatover
80percentofthenegativereportsthatarecirculatingaboutyourcompanycomefrom
detractors.
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
It is therefore important towatch them and address all their requests in a timely
manner.
PassivesPassivecustomersarethosewhoratedtheirloyaltytoyourorganizationbetween7
and8on the scale. Theseare customerswhoaren'tdissatisfied,but they certainly
knowhowyoucouldmakeyourservices/productsevenbetter.Idonotrecommendunderestimating thiscustomergroup.Theopinionsofapersonwhocan findsome
weaknesses is always worthmore to you than one who is completely satisfied or
chronicallydissatisfied.
Passivecustomersdon'tspreadnegativemessagesaboutthecompany,havealower
propensitytoswitchtocompetitionandaremoreeasilysustainable.
PříznivciPromotersarethecustomerswhoaremostloyaltoyourorganization.Theyratedtheirloyalty between9 and10on the scale. These customers spreadpositivemessages
aboutyourcompanyamongtheirfriendsandtheyaretheleastlikelytoswitchtoa
competitor.It'seasytosellthemallyournewproducts/servicesandimprovements.Youshouldreallypamperyourpromoters.Remembertherulethatretainingacurrent
customeris10timescheaperthangettinganewone.
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
The method of calculating Net Promoter Score® NetPromoterScore isnotthespecificnumberthatthecustomermarksonascalefrom0to11.NetPromoterScore®indicatestheoverallresultforyourorganization,
whichisakindofsingle-numbermetricthatsummarizestheloyaltyofyourcustomers.
Let'sseehowtocalculatethisnumber.
NetPromoterScoreisthedifferenceofthepercentageofpromotersanddetractors.
Theoppositeextremesthereforearethateitherwehavea100percentofpromoters
or100percentofdetractors.NetPromoterScore®valuesmaythereforehaveavaluebetween-100to100.Ifwehavemorepromotersthandetractors,theNetPromoter
Scorevaluesarepositive;ifthereisamajorityofdetractors,theyarenegative.
Surely you're asking -what is the normal value formost companies?What values
shouldyouachieve?Thereisnoexactanswer.Ofcourse,thehigherthebetter.Look
atthetablebelowtomentionafewexamplesofwell-knowncompaniesandtheirNPSvalues.
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
Company NetPromoterScore®
Apple 78
Amazon 71
eBay 69
Facebook 65
Google 63
SAP 60
Sony 41
Adobe 36
AT&T 9
Net Promoter Score = perception in context I've been reconsidering for a long timewhether our introduction toNet Promoter
Score®shouldincludethischapter.ButfinallyI'veseenthatwe'llencounterthisissue
soonerorlater,soIdecidedthatyoushouldlearnitearlyon.NPSisundoubtedlythebesttechniqueformeasuringcustomerloyalty,butlikeeverythingelsethismetrichas
its negative aspects. However, if you understand them well and perceive NPS in
context,itwillworkexactlyaccordingtoyourwishes.
What do I mean by perception in context? Unsurprisingly, the simplicity of this
methodology (which is already beginning to understand that the greatest strengthNPS)isalsoitsmostcriticizedpart.Itisquiteobviousthatthescalefrom0-11doesnot
fitall respondents,willdependonrespondents'personalitytypesandsocialstatus.
Soonyou'llobservethatdifferentratingsaregivenbypeoplefromvariousgeographicpartsoftheworld,variousreligiouscultures,etc.SometimespeoplejustchooseNPS
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
valueof10,eventhoughtheyarenottoohappy.Somegroupschoose7whenthey
areverysatisfied,justtoleaveafewpointsofheadroomforimprovement,whichtheythinkcanbealwaysdone.ButifyouperceiveNetPromoterScore®inthecontextof
thesevariousgroups,itwillstillprovideyouwithhighqualityandaccuratedata.Let's
lookatsomeexamplesforbetterunderstanding.
Widercontext
Imaginethatyouvisitawellnesscenterwithyourspouseorpartnerfortheweekend.Thewholestayisverypleasant,yougetagreatdealofrest,servicesaretop-notchand
you don’t have the slightest problem agreeing on your choice procedures. After
returningyou'resohappythatyoudecidetoorganizeacorporateteambuildingatthesamelocation.However,whenyougettherewithyourco-workers,youcannotagree
asagroup,whatyouwanttodo.Thusonehalfchoosestheirownentertainment,the
other half chooses procedures. Despite the fact that the services provided by thewellness center are still top-notch, the rating indicated by the participants of
teambuildingwillprobablydifferfromthescoresindicatedbyyouandyourspouseor
partner.
Solution:Identifythegroupsofyourcustomers,segmentthetotalscoreandanalyze
accordingtothesetargetgroups.Suchanalysiswilltellyouwhattoconcentrateoninordertoimproveyourservicesasmuchaspossibleandtoadaptyourservicestothe
greatestnumberofguests.
.
Personalcontext
Someonewhovisitsthewellnesscenterveryregularlyandhisbodyisaccustomedtotheseprocedureswillchooseadifferentratingonthesamescalefrom0to11than
someonewhovisitsthewellnesscenterforthefirsttimeandiscompletelysurprised
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
by the result. The same serviceswill be rated differently by someonewho is very
criticalthanbyapersonwholikestopraiseanythingtheyeverexperience.
Solution:Thesolutionhereisveryeasy.Justlikestatisticsonlystartstomakesense
onceyouhavea lotofdata,NetPromoterScore®worksthesame.Donot letyouroverallNPSbeaffectedbyindividuals,buttoexploreitonlyonceyouaccumulatea
highenoughnumberofratingsthatarenotaffectedbyeccentricrespondents.
Culturalcontext
When we were asked to measure customer satisfaction for a particular internet
organizationthatprovidesitsservicesprimarilyinEurope,NetPromoterScorewastheperfectmetricforthem.Afterdeploymentandcollectingasufficientamountofdata
we have found an interesting fact. Even though the services provided throughout
Europearecompletelyidentical,incountrieswhereNetPromoterScorehasbeenusedfora longtimebyvariouscompanies,theoverallscorewaslowerthanincountries
whereNetPromoterScore®isnew(mainlyinEasternEurope).
Solution: Do not look at Net Promoter Score® as a whole, but rather watch it
dependingonthegeographicalareaofyourcustomers.Watchitacrossatimeperiod,
butincomparablelocations.Andyes,ifyouwantanoverallNPSbenchmark(inthiscaseinEurope),selectcompaniesthathavethesamegeographicscope.
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
Net Promoter Score® – as a journey, processes and the system
Up to this pointwehavediscussedNet Promoter Score®only as a number,which
indicatesthedegreeofcustomerloyaltytoyourcompany.Yes,itisthemostimportantindicatoroftheentireNetPromoterSystem,butit'sonlythebeginningofyourjourney
totransformyourorganizationintoacustomer-orientedcompany.Onlythecomplete
NetPromoterSystem,implementingit,complyingtoit,closingthefeedbackloopwithcustomersandthereflectionoftheseactsintoyourdecisionswillactuallyprovidea
powerfultoolthathasenormouspotentialtoadvanceyourentireorganizationinthe
right,healthydirection,faraheadofcompaniesthatarenotcustomer-driven.IfweonlymeasuretheNPSvaluebutdonotknowhowtouseitandwhatmeasurestoapply
basedonthatvalue,NetPromoterSystem®methodologywillnotwork.
And what do I mean by the journey, process and system? I'd like to list 7 basic
processes that lead to strong, functioning and well-tested Net Promoter System®.
TheseprocessesweredefinedbytheSatmetrixcompanywhichtogetherwithBain&CompanyisamongthefoundersofNetPromoterSystem.Thedetailsoftheindividual
processesgo farbeyondthescopeof thispublication,which is to introduceyouto
NPS,butwewillcertainlydetailtheprocessesinanotherpublication.
Process1–DefinewhatyouwanttoaskPropermeasurementaccordingtoNetPromoterSystem®requiresyoutodefineinthe
beginning"what"youwanttoaskyourcustomers.Whatdotheyhavetoevaluate,
whentheyshouldevaluateit,whatdoyouwanttolearn,perfectormodifybasedontheir feedback? Are you sure that your customers are able to give you sufficient
information?
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
Prepare the Net Promoter question and any additional questions that customers
shouldanswer.
Paytheutmostattentiontothisstep.Atthispointitisadvisabletocontactsomeone
who already has experiencewith Net Promoter System® and ask for advice. I canindeedguaranteeyouthatitwillpayoff.
Process2–WaituntilyouhavecollectedgooddataFocus on such customer groups thatwill bring you themost profit. Focus on their
feedbackinthebeginning.You'llthusfastergetgooddatathatwillnotbeaffectedbycustomerswhodonotbringyouanappropriateprofit.Overtime,asyournumberof
responsesgrows,you'llhavetopayattentiontothesecustomers,too.Butstartsimple.
Howcanyoucollectdata?Youwillneedanautomatedtoolthatdoesthehardwork
foryou.OneofsuchtoolsisInsightSofa(http://www.insightsofa.com).Thesoftware
automaticallycollectsandanalyzesfeedbackfromyourcustomersandprovidesyouwiththeviewthatyouwant.Youcancollectdatabothonlineandoffline.
Process3–UnderstandwhataffectsyourscoreWhatisitthatmostpromoterspraiseyoufor?Whatcausesanegativeratingamong
detractors?Youhavetounderstandwhatyourcustomersthinkyou'redoingverywell,
andwhatthinkyou'redoingwrong.Anautomatedtoolwillhelpyouagainwiththeanalysis.Onceyoulearnthis,startacorrectiveprocessesinyourorganization.
Process4–PerfecttheindividualcustomerloyaltyYour Net Promoter question gives you a great opportunity to improve customer
satisfaction. If your customer provides feedback on your services/products,
IntrodutciontoNetPromoterScore®andNetPromoterSystem®
InsightSofa–automatecollectionandevaluationofNPS®
particularlyinthecaseofnegativefeedback,itisveryimportanttogetintouchwith
them immediately and try to resolve their dissatisfaction.Make sure to appoint apersonresponsibleforthis.Youwillseethatthiswillsignificantlyincreasecustomer
retentionandyouwillfeelthepositiveeffectofthisactivityverysoon.
Process5–PerfectthetotalcustomerloyaltyUnlikeindividualcustomerloyaltywhereyou'readdressingacomplaintofaspecificcustomer,totalcustomerloyaltyisaboutperformingcontinuouschangesinareasthat
customerscomplainaboutthemost.Listentothemandmakechangesthattheyask
forthemost.
Process6–CompareyourscoreBenchmarkyourscoreagainstyourcompetitionwithinthesameindustry.Setgoalsyouwanttoachieveandtakemeasuresthatleadtothesegoals.Lookatthechanges
inscoreafteryou'vetakenthemeasures.Diditimprove?Diditgetworse?Soonyou
willknowwhatleadstohighercustomersatisfactionandwhatdoesn't.Youareontherighttrack.
Process7–EnjoyyourbenefitsOnceyou'vesuccessfullygonethroughalltheprocessesdescribedabove,you'renot
justbeingdrivenbythescore,butyou'reapplyingtheentireNetPromoterSystem®.You're getting more and more customers who are loyal to your company. You're
creating more promoters than detractors. Many more positive comments than
negative ones are being spread about your company. Last but not least, you'regeneratingmuchhigherandmoresustainableprofits.Youareontherighttrack-the
NetPromoterway.
Soenjoyit!