Loyal brand advocates are invaluable for organizations. According to the White House Department of Consumer Affairs, loyal customers are worth, on average, about 10 times as much as their original purchase. Finding and retaining these loyal advocates is a worthwhile challenge for organizations. And just as important, organizations must put effort into finding and mitigating the concerns of their critics. With the ease of social media reviews, an organization’s biggest fans can spread positive feedback just as easily as detractors can easily spread negative comments across the internet. Enter the net promoter score.

The Net Promoter Score (NPS) was developed in 2003 by management consulting firm Bain & Co. as a better way for executives to understand how their customers feel about their organization outside of traditional customer service surveys. The NPS establishes a common language and metric around customer satisfaction within organizations and provides a framework for customer experience accountability.

A variety of questions were tested in the development of the Net Promoter Score and evaluated for correlation with customer behavior. Bain & Co. researchers found the question “How likely is it that you would recommend company X to a friend or colleague?” strongly correlated with the repurchase, referrals and other factors tied to growth. Respondents answer this question on a scale of 0 to 10, with responses of 9 to 10 classified as promoters who will continue to purchase and recommend, 7 to 8 as passives with a neutral relationship with the organization, and detractors who have a negative view of the organization as zero to 6. The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters, with a range of -100 if all customers are detractors to 100 if all customers are promoters.

Net Promoter Score Scale


Because of the simplicity, the Net Promoter Score provides a good user experience for customers with one question to answer followed by an open-end question to explain their response. However, the responses to the open-ended question aren’t always valuable in interpreting results. Customers may use the open-ended section to vent about frustrations with the company or ask how-to questions rather than provide insight into their opinion of the organization.

As with any method of measuring customer satisfaction, there are pros and cons to consider when using the Net Promoter Score.

Pros:

  • NPS is simple and easy to digest
  • NPS can be benchmarked and provides a common language and common means of organizing customers throughout an organization
  • NPS is known and recognized from organization to organization and across industries
  • NPS is on the radar of C-suite executives
  • NPS provides a good user experience for customers with one closed-end question, followed by an open-ended question for explanation

Cons:

  • NPS provides limited insight on how to interpret findings
  • NPS isn’t helpful without an action plan to fully leverage promoters and help temper detractors
  • NPS is focused more on customer relationship than transactions
  • The simplicity of NPS is a double-edged sword. In relying on the results of one question, nuances that would be gained with additional questions are lost
  • Because NPS is so ubiquitous, organizations often expect too much from it. Organizations often spend too much time and effort focused on influencing the score rather than focusing on customer experience

Understanding the benefits and limitations of the Net Promoter Score is vital to making the most of this metric and using it to drive better customer experience, improved loyalty, and greater customer centricity.