• The Net Promoter® Score (NPS) metric is based on recent research which suggested that the likelihood of consumers to recommend a company to their friends and colleagues is a predictive measure of loyalty

• According to a recent Harvard Business Review study, guest loyalty and satisfaction is about much more than repeat purchases. A guest who buys again and again from the same company may not necessarily be loyal to that company, but may instead be trapped by inertia, indifference, or exit barriers erected by the company or circumstances

• Conversely, a loyal guest may not make frequent repeat purchases, because of a reduced need for a product or service

Net Promoter Score… Overview

Net Promoter Score® (NPS®)

• A powerful discipline to measure and manage guest loyalty• Means for gauging performance• Establishing accountability• Prioritizing focus areas

• Theory that ‘willingness to recommend’ is a strong indicator of loyalty and growth…”because when guests recommend you, they’re putting their reputations on the line. And they’ll take that risk only if they’re intensely loyal”*

• Research shows strong correlation between a company’s growth rate and the percentage of its guests who are ‘promoters’

“In fact, the only path to profitable growth may lie in a company’s ability to get its loyal guests to become, in effect, its marketing department”

(Fred Riechheld)

*“Net Promoter® is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.”

The Discipline…

"Net Promoter Score" is the percentage of Promoters minus the percentage of Detractors

• Promoters are loyal enthusiasts who will keep buying and refer others

• Passives are satisfied but unenthusiastic guests

• Detractors are unhappy guests who can damage your brand and impede growth through

negative word - of – mouth

• WE ASK: Based on your overall experience with XYZ Company, how likely are you to

recommend our services to friends and colleagues? Please reply using the 0-10 point scale below,

where ' 0 ' means 'not at all likely to recommend' and ' 10 ' means 'extremely likely to recommend'.

The Measure…

Calculating NPS …

A Net Promoter® Score can be calculated by subtracting the percentage of Detractors from the percentage of Promoters

Ultimately, the theory behind the Net Promoter® Score metric is that a company

will experience long-term and sustainable growth only if the percentage of

Promoters is greater than the percentage of Detractors

NPS & Growth …

• Harvard Business Review research suggests that, in most industries, there is a strong correlation between a company’s growth rate and the percentage of guests who are Promoters – that is, those who say they are extremely likely to recommend a company to a friend or colleague

• For most companies in most industries, getting guests enthusiastic enough to recommend a company appears to be crucial to growth. It is worth noting that the size of a company has no apparent relationship to its Net Promoter® Score

• Companies with the most enthusiastic guest referrals, such as eBay and Amazon.com, received Net Promoter® Scores of 50% to more than 80%. The average firm, on the other hand, has an NPS of only 5% to 10%

Harvard Business Review research has surveyed several dozen industries around the world and found that the NPS leader on average has been growing at more than 2.5

times the rate of competitors

Voice of Customer• In a hospitality industry, guest loyalty and references are crucial – NPS is key to

measuring them. This underscores the strategy to “grow with existing guests”

• VOC process helps drive immediate actions and create focus on improvement areas to increase guest Loyalty, improve guest experience and drive profitable growth

• NPS can be measured at two levels to manage the total health of guest relationships, driving change across leadership and operational teams: – Top management level for ‘strategic’ insight &– Executive level for more ‘operational’ insight

• VOC tool is not just a guest survey, but a management tool that allows to drive ‘insight to impact’, stakeholder by stakeholder and engaging all levels from frontline to Leadership

Cultivating Intensely Loyal guests for Business Growth

The Practice…

Questions …

• Questions to be framed by a group of experts / consultants keeping in mind the

nature of the industry

• A series of satisfaction questions are posed to each participant

• The final question in every survey is always, “On an overall basis, how satisfied are

you with our company?”, which is the single most reliable metric for reflecting

guest satisfaction, and which have been able to quantify as the single most

accurate predictor of future revenue behavior

• Questions can be framed on :

• Over all performance

• Performance on specific areas

Sample QuestionnaireSample Qs

Attractive aspects of NPS …

• It is simple

• Easy to understand

• Can be disseminated across an organization with relative ease

• If a high percentage of guests indicate an unhesitating propensity to recommend a

company or product, that company’s sales force enjoys a built-in extension of its

efforts

Loyalty Shift Analysis

Movement of Promoters

PassiveDetractor

Promoter

Movement of Passives Movement of detractors

Loyalty Shift…

• Survey to be conducted twice a year (Half Yearly)

• Compare the results between the two surveys

• Note the movement i.e. shift of loyalty

No. of respondents :xxxxx

Critical Improvement Areas (Detractor remained Detractor) n= xx

Areas of consistency (Promoter remains Promoter) n= xx

Real areas of Strengths (Detractor to Promoter) n= xx

Valuable Vulnerable (Promoter has turned into a Detractor) n=xx

Critical to address Leveragable Strengths

Loyalty Shift…

• The Gap Analysis Framework outlines a comparison of what consumers find important against the company’s own performance. This framework was developed to identify opportunities; it prioritizes key areas to defend and grow NPS

Gap Analysis Framework …

Regression:• A regression analysis assesses whether one variable can be predicted by another. Multiple

regression generalizes this to ask whether one variable can be predicted by several others.• For example, multiple regression allows us to answer the question “what are the best predictors of

high ‘likely to recommend’ ratings?”ANOVA:• An Analysis of Variance (ANOVA) assesses whether responses from two or more groups differ

significantly from one another on a certain dependent variable.• For example, an ANOVA allows us to answer the question “do guests who respond to key statements

in a certain way give higher ‘likely to recommend’ ratings?”Correlation:• A Correlation analysis assesses the extent to which two variables are related.• For example, a correlation analysis allows us to answer the question “are higher ratings on key

statements associated with higher ‘likely to recommend’ ratings?”Chi-Square Test:• A Chi-Square Test is one type of correlation analysis, which examines the relationship between

variables when categorical data is used. This allows us to examine whether something happened more or less likely than chance would predict.

• For example, “are guests who give ‘Outstanding’ ratings on key statements more likely than chance would predict to be Promoters?”

Statistical Analysis …

Net Promoter Operating Model …

The first critical element at the core of the program is the creation of a

guest centric culture, or DNA

Incorporating all six elements of this model will ensure greater Net Promoter program success

=• General Electric (GE) uses Net Promoter Score to drive process excellence

for its customers, and plans to use NPS as a metric to decide the compensation of its leaders

• Procter and Gamble uses Net Promoter Scores to measure the health of its brands

• Allianz uses Net Promoter Scores to help it achieve what it calls "customer-centricity“

• Other companies using NPS include American Express, Concentra Medical Centers, Virgin Media, BearingPoint, The Carphone Warehouse and Intuit, Apple, ebay, Amazon, Cisco, USAA, Harley Davidson

• Verizon Wireless also uses NPS in all business channels including their call centers and retail stores

Some Industry Examples …

• GE has long engaged in detailed VOC surveying to understand what works and what doesn't for customers

• Adopted the Net Promoter Score® methodology to understand and drive Customer Loyalty as a core growth initiative

• They ask the customers a simple question about their experience with GE and their propensity to recommend services

• They have gathered a rich database of knowledge about customers and the business, which, combined with Lean Six Sigma methodologies have resulted in significant growth throughout the businesses

• A key part of understanding the customers is managing and actioning their complaints

• A centralized customer complaints system is part of the VOC program, including a process to ensure timely intervention when a customer is unhappy

The GE experience …

THANK YOU

An organization should achieve a Net Promoter Score of about +70%*

*As per Harvard Business Review Research

Prepared by

Snigdha Majumder

Head of the Department Lean Six Sigma

ITC Hotels Mumbai