NPS needs any company to be rigorously, continuously, consistently focused on the quality of the product.
History of NPS:
In 2003, Fred Reichheld of Bain & Company first presented the metric by way of his paper
"One number you
need to grow" in Harvard Business Review, where he discussed “By substituting a single question for the
complex black box of the typical customer survey, companies can actually use the results of consumer surveys and
focus employees on stimulating growth”. How is NPS calculated?
NPS is calculated based on one survey question where customers are asked to rate on a scale of 0 to 10 ‘
likely are you to recommend this company’s product or service to a friend or a colleague?’
The results from the survey classify customers into 3 segments:
Customers who rate the product between 9-10, on frequent transactions stay for longer periods and they refer to other
potential purchasers as value adders and thus leading to the increase of the sales and growth.
They are happy consumers, but they are unenthusiastic about endorsing the product or recommending it to others and in
the long run will turn to another product with the same characteristics based on their utility. They rate between
Such consumers are not glad about the product and its utility and are vulnerable to negative ads and damage the
business or product image. They rate between 1-6.
NPS = % Promoters - % Detractors
Lowest NPS: -100 and Highest NPS: 100
When the score of all the customers is 6 or less than 6, then the NPS score is -100, and likewise it is 100, if all
the customers are 9 or 10. For example, if the NPS is over 60 for a certain business, a large number of consumers
would rely on the product and become frequent buyers. On the other hand, NPS is 0 means that the company must
innovate further to boost service with its customers. The stronger NPS of a business shows accelerated future
development, particularly by providing new potential buyers with customer references. This helps recognize growth
opportunities, possible threats and required developments.
Promoters: Promoters bring in new customers who become promoters so give them a platform
and a mouth place to promote the business. Their goals are to increase reference customers
Passives: They just need a reason to promote and tell them about the improvement and
regular progress updates. Their goals should be to convert 30% to promoters and quarterly
Detractors: Target specific customers, ask them to help you improve, make them trusted
advisors and show them you are listening and taking action. Their goals should be to convert 20-30% and monthly
Non-Responders: They are just waiting for one more reason to switch to your competitors.
Here the goals are to increase the survey response rate, monthly communication and personally re-commit to
25%. How NPS works?
NPS requires strategy and commitment by company professionals because it defines the values followed and the core
economics that affects the business system. NPS works in different stages, including strategic leadership
commitment, reliable metrics, feedback and improvement, employee engagement, and operational and analytical
infrastructure. It acts as a practical framework, unlike accounts where short-term benefits are realized at the
expense of customer loyalty. Companies are encouraged to provide space for customers to provide regular feedback and
suggestions about further improvement. The surveys can include three to four questions like “why” behind the ratings
given, and the most important part to include the “likelihood to recommend” question to be answered on a scale of
0-10. Additional questions can be added to better understand the perception of products, services, and
different customer services.
So it’s better to measure NPS by looking for a benchmark like a competitor’s score because it helps taking industries
into consideration. For example, a food chain will have higher NPS compared to a bank, because they provide more
satisfaction to the customer, therefore the comparison needs to be done within similar industries. It also varies
across the markets in different countries like the US and Europe have different approaches like European customers
being more conservative while rating so it’s unlikely to get a score of 9 or 10. Because of these differences, NPS
is more subjective in nature will ambiguities that need to be taken into account and companies should, therefore,
better focus on the drivers of NPS and how to improve on a regular basis to build long term strong customer
How to implement NPS?
Mature net promoter system does more than predict loyalty; they cultivate customer-centric culture structured for
customers’ needs to create frontline promoters to delivers business improvements. It creates a mature NPS system,
and the result can be astounding using focused driver questions.
The driver's question should be optimistic; it should be known that the pledge is better fluffed. It also correlates
better with NPS so that if driver questions are strongly associated with the business target, NPS is strong
Over time, one might find a cause-and-effect relationship, and what is great about that the organization and its
promise to the customers, which matter the most to them, so there is extreme value there to fulfill them. In a
nutshell, it will strengthen the understanding of NPS by clarifying the promises that matter most to the
NPS surveys in Blocksurvey under the Customer Experience question
component. NPS Example
Let’s get into the NPS example in the best business-to-business realm. If the company scores low on NPS, the zero to
six realm are not likely to recommend to their friend or family, which should pose some kind of alert for your
management. Next, what we do in the NPS program is have a recovery alert that goes directly to the manager, who can
positively impact the customer experience. So the important thing about the recovery notices is pushing them and
make sure to bring a fair solution for that customer.
Also, make sure that the surveys conducted with a frequency for a customer base reoccurring to envelop the customer
experience metric over time should et know when you are providing better customer service through the reoccurring
Customer and employee engagement through regular communications shows the sincere desire and ability to listen, take
action and improve. The result is an engaged customer base and workforce which translates into loyalty and higher
profits through lower marketing and lower attrition costs. The culture in an organization transforms into one of
listening and taking action and score focused behaviors which will be replaced with improvement in focused actions.
Thus NPS has evolved beyond merely a score as it is used for strategic framework and measurements like Objectives
and key results and Key Performance Indicators. It is a system of management to ensure the effective execution of
strategy with a common framework language and philosophy. Here, all levels of the organization can remain focused on
one objective and strive to enrich the customers. This not only inspires the team members to give their best, but it
also provides a metric to help the company to know if it is meeting its goals to delight customers which is a
formula for profitable growth.