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Outperform the Market - Manage your Net Promoter Score

Collage of words with Customer Loyalty the main phrase in blue. Pen in upper right corner and glasses on left side. What customers think.

6/24/2016

If you are looking for a new method of measuring customer or brand satisfaction, you may want to consider the Net Promoter Score (NPS). NPS is an alternative to the standard Customer Satisfaction Score; the one you have been measuring via multi-question surveys. NPS is a measure of customer loyalty, which is a more effective method of determining the likelihood that a customer will continue with the company, purchase more goods or services, speak well about the company and resist market pressures to move to a competitor.

There are many advantages that the NPS has over the usual measurement: ease of use, real-time feedback and simplicity. Unlike customer satisfaction surveys which have up to twenty questions, the NPS gauges loyalty with only one to three questions, the main question being “How likely is it that you would recommend our product or service to someone you know?” Since the ratings are on a scale of zero to ten, there is very quick feedback available for management to assess how they are doing. It is advised that if a customer scores the company below a nine, a follow-up call should be made to address any issues.

Proponents of the NPS see a correlation with revenue growth and high net promoter scores. Management of many large corporations use and actively monitor their Score. They believe that managing their NPS will improve business performance by keeping their operations customer focused. Some of the Score’s users include American Express, Apple, GE, Intuit, Phillips and Siemens.

NPS is not without its share of critics. Some research studies have shown no evidence that the “likelihood to recommend” is a better predictor of growth when compared to other measurements. Other studies indicate having fewer questions is less reliable and more volatile than longer surveys. Another study questioned the measure altogether, stating the intention to recommend does not suffice to predict loyalty behaviors.

Despite the criticisms, more and more companies are using the NPS as a measure. With management seeing positive correlations, why not track your score?

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