2.3.2. Net Promotor Score and Net Promoter System (NPS)

The Net Promoter was developed by Satmetrix, Bain & Company and Fred Reichel and is currently the worldwide standard for organizations to measure, understand and improve their customer experience. The Net Promoter Score is a straightforward metric that helps companies and employees understand and be accountable for how they engage with customers.²⁹

This scoring system uses the following approach: The Net Promoter Score, or NPS^®, is based on the fundamental perspective that every company’s customers can be divided into three categories: Promoters, Passives, and Detractors. By asking one simple question “How likely is it that you would recommend the product/ service/company to a friend or colleague?” and collating the answers to fall in one of the three groups mentioned above, we can get a clear measure of the company’s performance through the customers’ eyes. Customers respond on a 0-to-10 point rating scale and are categorized as follows:

Figure 6: The three groups of respondents³⁰

• Promoters
  Promoters are customers who have rated the question of recommendation with 9 or 10, which means there are satisfied and extremely likely to recommend the product or company to others.
• Passives
  Passives are satisfied customers, but unenthusiastic and vulnerable to competitive offerings.
• Detractors
  Detractors are unhappy customers who can damage the brand and impede growth through negative word-of-mouth.

After all customers have been divided into these three categories, the relative share of promoters and detractors needs to be calculated as follows:
Number of Promoters / number of respondents x 100 = relative share of Promoters
Number of Detractors / number of respondents x 100 = relative share of Detractors

The NPS is then calculated by simply subtracting the % of Promoters from the % of Detractors:

Figure 7: How to determine the NPS³¹

Successful and global players from different industry sectors such as Deutsche Post World Net, Hertz, Procter & Gamble, T-Mobile, Dell, Sony and many more are using the Net Promoter Score.³² The following examples of current NPS star performers are taken from the latest Satmetrix Net Promoter industry benchmark reports³³:

Table 1: NPS Leaders in the U.S. and UK in 2012

Table 2: NPS Leaders in Germany and France in 2012

NPS is sometimes criticized for its simplicity: yet by itself the score is just that: a simple metric. However, put contextually it is the start of a cascade of events which will help the company to identify and meet the customer’s true needs and eventually result in organizational growth. The process that starts with the score lends to the knowledge to create the ideal product in the view of the customer. The Net Promoter System involves exploring the root cause, learning, taking action and providing feedback, as demonstrated diagrammatically below.

Figure 8: The processes of the Net Promoter System³⁴

The NPS without the second crucial “WHY” question is just a number; the “WHY” reveals the reasons for recommending or not recommending a product, service or company. It provides the opportunity to learn about needs, expectations and the real experience of the customer.

The success of the Net Promoter System lies in its simplicity. The principle can easily be understood and the score can be calculated quickly and conveniently communicated not only internally but also externally.

²⁹ http://www.satmetrix.com/net-promoter [27 June 2013]
³⁰ http://intouchcalls.com/net-promoter-score.php [27 June 2013]
³¹ http://www.satmetrix.com/net-promoter/net-promoter-score-and-model [27 June 2013]
³² http://www.netpromotersystem.com/about/companies-using-nps.aspx [27 June 2013]
³³ http://www.satmetrix.com/net-promoter/net-promoter-benchmarking-2/ [27 June 2013]
³⁴ http://www.netpromotersystem.com/system-processes/what-is-a-net-promoter-system.aspx [28 June 2013]