Primer on NPS®
Contemplating adopting the entire system or a part of it? Lay down a solid education program covering the concepts in this primer to give the program a fighting chance.
Frederick F. Reichheld, a Boston-based author and director emeritus at Bain & Company, conducted research for two years culminating in the 2003 Harvard Business Review paper The One Number You Need to Grow Frederick F. Reichheld 12/03
The objective was to “link[ed] survey responses with actual customer behavior — purchasing patterns and referrals — and ultimately with company growth.” The results were “clear yet counterintuitive” pointing to a certain process that predicts business performance from satisfaction.
These insights led to the metric, Net Promoter Score®, evolving into the Net Promoter System® practice discussed in the best-selling follow-on book series The Ultimate Question…
The Net Promoter System bursts beyond the metric into a transformative practice for companies recognizing the urgency to renovate the customer journey. They see the need to go beyond the legacy, technocratic and too ‘shapeable’ satisfaction measurement methods to a clear and straightforward system the entire company must buy into.
Within the system, the Net Promoter Score becomes a relative index of progress against the overall transformation.
Calculating the score starts with creating three customer segments:
- Detractors unhappy clients who will go elsewhere with little inducement
- Promoter loyal enthusiasts that urge their friends to use the company
- Passives satisfied but unenthusiastic and easily wooed by competitors
Customers are segmented from their answer to one question - at a particular point of service or overall: Please express, on a scale of 0-10, how likely you would be to recommend us based on your experience?
Scores are tabulated as:
- 0 to 6 Detractors are summed and expressed as a percentage of all response
- 9 or 10 Promoters are summed and expressed as a percentage of all replies.
- 7 or 8 Passives are ignored but still count in the sum of all responses.
The research shows Detractors have significantly more drag on growth than Promoters have to accelerate it and Passives are neutral with no impact either way. The function reflects this principle requiring 4 Promoters to offset each Detractor or Passive.
Scores range from -100 to +100. The example illustrates how the score is calculated.
To get a grip on company scores, the site NPS Benchmarks keeps track of submitted and published scores. Some recent illustrations,
| Company | Score |
|---|---|
| Liquid Web | 73 |
| AT&T | 15 |
| Time Warner Cable | -5 |
| State Farm | 45 |
What’s in a Name
The Net Promoter System can transform companies. However, successful implementation requires every employee to have complete buy-in and religiously support the program. With change management of this magnitude, even slight headwinds cause unrecoverable setbacks.
With most evolving new technologies, inadequate term usage happens. Net Promoter System terms can be a source of confusion. Across all the tactics needing flawless execution, the terminology is the most elementary and can be tolerated as a headwind.
Bain discusses proper use of the terminology and their marks as follows:
- Net Promoter System®
- Net Promoter®
- Net Promoter Score®
- NPS® [referring to Net Promoter Score]
With this required attribution language:
“Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc. The marks need only appear the first time of each use in a document.”
Contemplating adopting the entire system or a part of it?
Lay down a solid education program covering the concepts in this primer to give the program a fighting chance.