The Net Promoter Score (NPS)

May 2, 2019 - 1
The Net Promoter Score (NPS)
“Measuring & Improving Customer Loyalty”
by Operational Excellence Consulting LLC

May 2, 2019 - 3
The Net Promoter Score – A Little Bit of History
Net Promoter Score is a customer loyalty metric developed by
(and a registered trademark of) Fred Reichheld, Bain &
Company, and Satmetrix Systems.
It was introduced by Reichheld in his 2003 Harvard Business
Review article "One Number You Need to Grow“.
Today, the Net Promoter Score has been widely adopted with
more than two thirds of Fortune 1000 companies using the
metric.
"Essentially, all models are wrong, but some are useful."
George Box
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May 2, 2019 - 5
A Definition of Customer Loyalty
First, a definition. Loyalty is the willingness of someone – a
customer, an employee, a friend – to make an investment or
personal sacrifice in order to strengthen a relationship.
For a customer, that can mean sticking with a supplier who
treats him well and gives him good value in the long term even if
the supplier does not offer the best price in a particular
transaction.

May 2, 2019 - 7
Customer Loyalty vs. Growth Rate
It is proven that in most industries, the percentage of Customers
who are enthusiastic enough to refer a friend or colleague –
perhaps the strongest sign of Customer loyalty – correlates
directly with differences in growth rate among competitors.
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May 2, 2019 - 9
The Net Promoter Score (NPS) – The Question & Scale
“On a scale of 0 to 10, how likely are you to recommend this
company’s product or service to a friend or a colleague?”

May 2, 2019 - 11
The Net Promoter Score (NPS) – The Metrics
Example: 0 – 6 → 28 Responses
7 – 8 → 55 Responses
9 – 10 → 17 Responses
NPS = 17% - 28% = - 11%
Ʃ = 100
“On a scale of 0 to 10, how likely are you to recommend this
company’s product or service to a friend or a colleague?”

May 2, 2019 - 13
The Net Promoter Score – The Objective
A Customer feedback program should be viewed not as
“market research” but as an operating management tool.
“We need more promoters and fewer detractors in order to
grow”.
The goal is clear-cut, actionable, and motivating.

May 2, 2019 - 15
The Net Promoter Score – 2016 NPS Benchmarking Study
0 10 20 30 40 50 60
Internet Services
Cable / Satellite TV Services
Health Insurance
Airlines
Banking
Shipping Services
Online Shopping
Hotels
Grocery / Supermarkets
Department / Speciality Stores

May 2, 2019 - 17
Net Promoter Score – Growth Rate vs. NPS

May 2, 2019 - 19
NPS Estimator – Margin of Error (MoE)
Your boss walks in with a chart of the last 12 months of the
organization’s Net Promoter Score survey results and he’s not
happy!
The score went down last month and he want’s to know why.
Looks like you’ll have to hunt around to find a reason for the
change; or will you?
= ± ∗
= 1.96 for the 95% Confidence Interval

May 2, 2019 - 21
Let us assume:
#P = 915, #N = 543, #D = 282 → #T = #P + #N + #D = 1740
-10+1
Mean Value = ( (+1) * 915 + (0) * 543 + (-1) * 282 ) / 1740 = 0.364
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May 2, 2019 - 23
Finally, you can calculate the Standard Error (SE) or Margin of
Error (MoE) for your sample with the sample size #T.
= ± ∗
= 1.96 for the 95% Confidence Interval
: = = 567(89:)B
#9 + #8 + #>
B
C

May 2, 2019 - 25
NPS Estimator – Tracking with Margin of Error (MoE)

May 2, 2019 - 27
Rows: Period Columns: NPS Responses
Detractors Neutrals Promoters All
Sample 1 282 543 915 1740
290.1 480.1 969.8
0.226 8.254 3.101
Sample 2 642 986 2174 3802
633.9 1048.9 2119.2
0.104 3.777 1.419
All 924 1529 3089 5542
NPS Comparison – Chi-Square Test Analysis
A p-value below 0.05 indicates that
there is a significant difference
between the NPS of Sample 1 and
Sample 2.Chi-Square Test
Chi-Square DF P-Value
Pearson 16.881 2 0.000
Likelihood Ratio 16.670 2 0.000

May 2, 2019 - 29
Net Promoter Program – TOP 10 Best Practices
“2. Brand you Net Promoter Score (NPS) Program.”
Give your Net Promoter Program a tagline.
Ensure that your program is internally recognized.
Communicate the value of the Net Promoter Program to all
members of the organization.
https://www.youtube.com/watch?v=Xg9V7tLQ2jg

May 2, 2019 - 31
“4. Survey design consistency is vital.”
For most organizations you will need to add questions to
understand what drives the score. No more than 10
questions. Test for correlation.
You want the survey as short as possible to drive up the
response rate and lower the impact on your customers.
Ensure that the survey is consistent from one customer to the
next and one wave or transaction to the next. Resist the urge
to re-order questions, add new ones, change the wording,
etc.
Understand how to improve: You know what drives the score
but you also need to know how to move the score.

May 2, 2019 - 33
“6. Create a NPS Improvement Team.”
To make a Net Promoter Program work you have to have a
cross functional team tasked with driving change.
Employees know 100% of the Customer concerns because
Customers tell them every day.
You can’t satisfy your Customers with disengaged employees
→ Internal Detractors – Passives – Promoters → eNPS .
Implementing your Net Promoter Program correctly will drive
employee engagement.
“0” is a special number. These Customers are generally still
engaged with your brand. Act on it !

May 2, 2019 - 35
Net Promoter Program – The “Single” Feedback Loop

May 2, 2019 - 37
“7. Instrument the Customer Journey.”
Get a deep understanding of how Customers perceive each
and every interaction with them in your Customer journey.
In case your Customers interact with you several times to
complete a task, it is best to …
start with a map of their journey through the process
in this map identify the moments-of-truth that are important to the
customer – can cause drop out or ensure success
at each Moment of Truth (MoT) determine the key drivers of
satisfaction, where the data to trigger a feedback request will
come from and the best channel to present that request
Sample customers at each Moment of Truth (MoT)

May 2, 2019 - 39
Net Promoter Program – Customer Experience Management
Research Purchase Delivery Pay Bill Usage Get Help
JOURNEY STAGES
Website
Marketing
Sales &
Legal
Warehouse &
Shipping
Finance &
Collections
Product
Engineering
Customer
Support
FUNCTIONAL ACCOUNTABILITY
Marketing
Leader
Sales
Leader
Department
Leaders
Department
Leaders
Product
Leaders
Service
Leaders
Executive Leadership & Steering Team
Cross-Functional NPS Improvement Team
Account Management
EmployeeAlignmentbyRole

May 2, 2019 - 41
“8. Read and share all qualitative responses.”
There can be a tendency to not read all the text responses
from Customers.
4% of responses ask you to take action for the Customer,
including providing a quote for more business – not
something you want to miss.
Share the Customer verbatim comments with the entire
organization – the good, the bad, the ugly.
Transparency of this data across the organization is key.
…

May 2, 2019 - 43
“10. Don’t bother benchmarking your score externally.”
… unless you are going to do it right, i.e. understand the
drivers of the score.
The only valid comparison of your Net Promoter Score is to
your past trend. Cross-company comparisons are in most
cases sheer folly.
If you’re ahead of your competition are you going to stop
driving change? No. If you’re behind them are you going to
stop driving change? No.
→ Information that drives no change in what you will do is
worthless.

May 2, 2019 - 45
Net Promoter Program – Recognition & Rewards
Let’s take a look, then, at the variety of reward and recognition
techniques available.
Real-Time Feedback → The central technique of the Net Promoter
System is to provide customer feedback as soon as possible to each of
the employees who were involved in the transaction.
Informal and Formal Storytelling → Promoter stories can also be
reinforced and shared in supervisor-led conversations or team huddles.
Peer Recognition → For many employees, the most meaningful
recognition often comes from colleagues and teammates.
Award Competitions → Some organizations have competitions to
ensure recognition is embedded in the culture and celebrated.
Executive Recognition → Executives often have more influence than
they fully understand, and the symbolic messages they send through
the positive reinforcement can have a huge impact on employees.

May 2, 2019 - 47
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