Net Promoter Score - a story
The Net Promoter Score is, at its core, a customer loyalty measuring tool. It was proposed by Bain & Co.’s Fred Reichheld, gaining traction in the latter 2000s as one of the preferred means of looking at customers’ view of a company (Top-Down score), product or service (Bottom-Up score).
Rather than the very simplistic Average Score system (like the five star system we all know from Google Maps, for instance), NPS was envisaged as a means to shed additional light on multiple marketing- and customer-related angles. However, it’s a survey, not a scientific study.
The mechanism works as follows:
1. A person is asked the likelihood of recommending said company, product or service to a friend or to family, on a scale from 0 (extremely unlikely) to 10 (extremely likely), and why. There may be additional Driver Questions as well, but that depends on aspects one wants to bring into sharper focus.
2. Responses from 0 to 6 are considered Detractors, 7 and 8 are considered Passives, and 9 and 10 are considered Promoters.
3. The score is obtained by subtracting the percentage of Detractors from the percentage of Promoters. Therefore, its range is from -100 to 100.
Easy, neat and elegant. Ideally, something to be put up on a website for all to see! And most Fortune 500 companies actually do exactly that.
What is NOT as straight-forward is the actual meaning of the score, and, provided a business doesn’t want to see it drop, how exactly to increase it. A product/service will be promoted by customers who find it “ticks” ALL their expectation “boxes”… and will not be promoted by those who find it lacking in any of innumerable ways! That’s where granularity, provided by the Driver Questions, comes into play. If more details are available, they can reveal not only short-comings, but also significant groups of customers with similar views, and those may be less evident from inside the company. While everyone busy with operations is focused on delivering a concrete, solid and tangible improvement in one field or another, the customers may actually wish for something completely different.
For instance, an electricity distribution company in Scandinavia decided the transfer, on a very tight deadline, of virtually all their aerial wire network underground, in order to prevent further power outages due to blizzards during winter months in the rural parts of the country, thus incurring serious financial and man-power efforts. This was thought to dramatically improve their customers’ perception, as the North of the country experienced very inclement weather. Much to their surprise, their NPS did not reflect the expected improvement.
When asked about it in meetings, customers perplexingly declared not to had terribly minded the outages, as they were occasions for families to gather all in one room, put a kettle on the old-fashioned stove, have a good time playing board games and spend some quality time in an old-fashioned way which reminded adults of their childhood! This was an eye-opener for many people in the Nordics at the time. However, it doesn’t mean customers in other parts of the world would share this view. For instance, weather-related power outages are perceived extremely negatively by people living in countries with a history of rolling black-outs and subpar power network infrastructures.
Also, the NPS itself does not address the Passives, and they are really significant in the big picture.
On one hand, it’s likely most Passives’ “unticked boxes” will be the same as those of Detractors. The difference is it will be fewer of them or they will not be perceived as negatively. To give an example: a utility company’s NPS is usually affected capitally by its pricing policy. Where a Detractor and a Passive diverge in this case is that the former is negatively affected by the money spent on the service and, maybe, puts that down to the company’s alleged greed, while the latter pays the same, but may realize that a lot of external factors come into play as well. If the survey is well thought-out, results will indicate how a company may transform some of the Passives into Promoters and also reduce the number of Detractors, turning them into Passives.
On the other hand, the “retention is significantly cheaper than acquisition” sales rule translates to “turning Passives to Promoters is cheaper/easier than transforming Detractors”. It does not mean that focus shouldn’t be taken off the Detractors, as they are the clear indicators of which areas need most improvement in the overall perception.
As far as a tool for brand management and gaining core customers’ expectations insights, NPS is a reliable one. One of its early adopters was Harley-Davidson, the motorcycle producer. They have a brand loyalty of above 80%, and with good reason. Do they make the best motorcycles in the world? NO! Do they try to constantly improve their products? Also NO, arguably.
However, by always keeping their attention on what is really important to their core customers, Harley-Davidson rarely makes a faux-pas. Their products are not as much a means of transportation, but a state of mind or an anachronistic fashion statement. And while it can be argued that having a target audience of mainly blue-collars usually in their late 40s to early 70s, the truth of the matter is everybody gets older as time goes by, and opportunities of tearing down a highway at a million miles per hour are exceedingly rare these days.
As it was proven repeatedly in the last 20 years, NPS is a powerful and very versatile tool. Its applicability to brand management, products, services, processes, marketing strategies and even human resources is by now well established.
