Everybody knows that the Customer Experience is the heart of the business – but what is the actual impact?Read more
Net Promoter Score (NPS)
The Net Promoter score (NPS) builds on Bain & Company’s article ”The One Number you need to grow”. This article introduced NPS as the single tool that can explain satisfaction and loyalty. Since then, NPS has been implemented across a variety of different segments and industries.
What is Net Promoter Score?
A Net Promoter Score is built around the question “To what degree would you recommend brand x to a friend or colleague?” NPS is then defined as the difference in the share of promoters and detractors.
NPS is a net number between 100 and 100 that describes how recommendable your overall brand is.
Interaction or relation?
A Net Promoter Score is often presented as the only number needed to measure customer experience. The reality is, however, that NPS represents an overall rating. It describes your relationship with your customers and their overall impression of your brand rather than how individual interactions have been executed. We often see that NPS is used based on interactions, which results in a misconception of how your brand has fared. Typically, interaction-based assessments are far higher than the overall rating.
Small sample sizes
Another challenge we often experience with the Net Promoter Score is its implementation across large hierarchies. NPS is a so-called net measurement and requires over 10 times as much data as a simple satisfaction index. This means that when it is used by small groups it will result in large measurement fluctuations without necessarily reflecting the true picture. Therefore we often implement NPS as an overall goal for the entire business while using tools such as the Customer or Employee Satisfaction Index further down in the hierarchy.
The right balance
If you are to link NPS to customer retention, loyalty and profits, it is crucial that NPS is used with care. At ag analytics we have extensive experience with the design of KPI structures that are both actionable and relevant. Typically, we report NPS on an overall level while lower hierarchies and interactions require other indicators.