Do you remember going to the doctor when you were a kid, and they would bring out the chart of frowning faces that transformed into smiling faces? Then, they would ask you to rate your pain based on those faces? Yes…I remember…but how on earth does that chart relate to marketing?
Imagine if your doctor asked you to point to the chart and show him / her how happy you are with the hospital’s services, instead of your level of pain. Would you happily recommend your doctor to a friend, or would you not?
What is Net Promoter Score (or NPS)?
Net promoter score, also known as NPS, is a system designed to measure customer experience and provides insight into why people are engaged or disengaged with a brand. The frowning faces on the chart would relate to disengaged or unhappy customers, while the smiling faces would relate to engaged or happy customers.
Using a 0 -10 scale, the system asks how likely someone is to recommend (insert brand name here) to a friend or colleague? Respondents are placed in the following groups: promoters, passives / neutrals and detractors.
- Promoters – loyal customers who are likely to stay engaged / repeat purchase
- Passives / Neutrals – unenthusiastic customers who are vulnerable to an alternative brand’s products and service offerings that serves them better
- Detractors – dissatisfied customers who may be actively seeking an alternative (and who can damage the brand through negative word-of-mouth)
If you subtract the percentage of detractors from the percentage of promoters, you have your net promoter score – a ranking that can range from -100 to 100. If a brand ranks below zero, they have more detractors than promoters, and if it ranks above zero, they have more promoters than detractors. What is considered a good net promoter score? A 100…just kidding, that’s unreasonable. Honestly, it totally depends on the industry and customer focus.
Incorrect Use of Net Promoter Score
While we agree that you need research to back marketing decisions, your net promoter score cannot solely dictate those choices. Why? If all respondents answered with 6/10, then your NPS would be -100. If they all answered 7/10, your NPS would be 0 and if they all answered 9/10, your NPS would be 100. At the end of the day, the NPS score is just a number.
If you based your marketing efforts off of your overall net promoter scores, they would not be based on an insightful understanding of your customer’s true sentiments. The follow-up question is what really matters to world-class marketers – “What about your experience led to that score?”
Improving your net promoter score isn’t something you should focus on. But you can focus on maximizing the factors that lead people to become promoters and mitigating the factors that lead them to become detractors. It requires an analysis of your current practices as a brand and thoughtful time speaking with your current customers — both the happy and not so happy.
Measures like these are often used as means for measuring brand equity, or brand strength. However, there is is no brand equity measure that should be tied to revenue growth…if revenue growth is what matters, an organization already has that number (it’s called “revenue growth”). The theory behind NPS should be used to understand the factors driving stability or instability of your customer base, not necessarily future revenue growth (or anything else for that matter).
Let revenue speak for revenue, let transactional experience feedback speak for the quality of your customer service transactions, and let NPS speak for whether your organization’s underlying brand strength / equity is increasing or decreasing over time.
If your organization’s goal was to last for 1,000 years (or at least two, if you find yourself at a struggling organization), you should measure NPS. If your goal is revenue growth next quarter above all else, NPS alone cannot help you.
How to Use NPS Correctly
At Magneti, we use NPS in our research process. We use it for feedback on the organization’s customer base as a whole. Think of it like a doctor checking the pulse and blood pressure of the one person who matters most to you (your customer).
We spend virtually zero time concerned with an overall NPS score, unless it is useful in clarifying something important for a leader (like, “7 is going to be a problem”). Almost all of our time is spent looking at rich statistical and qualitative differences between promoters and detractors to reveal strengths and weaknesses in satisfying customers. Using logistic regression and other methods, we then identify factors that make someone more likely to be a promoter (or detractor).
NPS is about loyalty, but in reality, we use it as a satisfaction measure. NPS represents meta-satisfaction, not just satisfaction on a single plane (like value or quality).
At Magneti, we’re often brought into high-level management decision-making. Helping clients make product or program changes based on their NPS feedback should lead to higher satisfaction and more promoters / fewer detractors in the years ahead. But our focus is on using NPS-driven insights to build healthier, more successful organizations — not raising your NPS. It’s a useful tool, and a terrible thing to fixate on.
So what is driving your promoters? Do you face a dangerous volume of detractors in your current customer base? Let’s work together to determine why your promoters promote, and why your detractors detract. We guarantee you’ll discover something surprising that will help you take your organization to the next level. And we promise we’ll do everything in our power to help you build a brand that gets credit for all of the amazing things you’re doing.