Giving Senior Executives More Insight from NPS

blue_bulb1.jpg  The Net Promoter website describes the Net Promoter Score (NPS) as providing “the single most reliable indicator of a company’s ability to grow.”  There has been an on-going debate about how true this statement is and the real value of NPS, particularly for senior executives.  To better understand some of what the debate is about, check out this post at Marketing ROI and the posted comments.

I have been using NPS with clients for a couple of years now, and I’m not convinced yet that it is the best indicator of a company’s ability to grow.  The real work is figuring out what drives the likelihood to recommend for each business, and then measuring the actual recommendation behavior and corresponding purchase behavior of customers.  That is more than a blog post, so on to what you can do right now to get more value out of your NPS work…

As a quick review, NPS is calculated by first asking the following question with a 0 to 10 point answer scale:

“How likely is it that you would recommend (Company X) to a friend or colleague?”

Then you take the percentage of customers who are promoters (10’s & 9’s) and subtract the percentage who are detractors (6’s – 0’s):

% of Promoters – % of Detractors = Net Promoter Score (NPS)

To get additional customer insight, I also pair it with the following question:

“What was the most important factor that influenced your score above?”

What I like to present to senior executives is a summary of the answers to this question from the detractors.  Yes, they also get to see the comments from promoters, but they are already aware of this perspective.  There is often more value found in reading the detractors’ comments.  This tells executives what customers don’t like about their business or products and services.  This feedback contains the real voice of the customer, and often they are pretty blunt comments.  We all like to know what we do well, and we need to keep doing those things; but real insight, and real growth often comes from improving what is really wrong with a business.

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12 Responses

  1. […] addition to the Keiningham study, comes stories like the one from Paul Schwartz who wrote: I’ve been using NPS with clients for a couple of years, and I’m not convinced […]

  2. Paul, I love the idea of adding that feedback question. Understanding our customers is so much more than crunching numbers. It is understanding their drivers and motivators for behaviors so we can support those behaviors.

    You rock, Paul! 🙂

  3. Thanks Becky! I agree that insight into customers comes from more than numbers. Another test of a good measure is if it goes up or down, do we know what caused the change…

  4. Hi Paul,

    It will always be hard to attach a crunched number to emotional value! Do you think there have been any positive growth/enhancement to how the Net Promoter Score analyzes since this post?

    Kim

  5. At this point, I have not seen much Kim. There is wonderful debate that continues to develop about the real value and reproducibility of the NPS data. I personally think that measuring the attributes that determine how well customers feel a business is their advocate is the way to go, and not measuring how likely a customer will be an advocate of a business (which is what NPS does). Check out http://www.projectadvocacy.org for more information on such a project for the credit union industry.

  6. […] the Ultimate Question” Posted on June 30, 2009 by Paul Schwartz Since I have written in the past about Net Promoter Score (NPS) the publishers of this most recent book sent me a copy and […]

  7. Hi! I was surfing and found your blog post… nice! I love your blog. 🙂 Cheers! Sandra. R.

  8. Thanks Sandra, great to hear you found value from my blogging!

  9. […] I have written in the past about Net Promoter Score (NPS) the publishers of this most recent book sent me a copy and […]

  10. […] addition to the Keiningham study, comes stories like the one from Paul Schwartz who wrote: I’ve been using NPS with clients for a couple of years, and I’m not convinced […]

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  12. […] addition to the Keiningham study, comes stories like the one from Paul Schwartz who […]

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