“You can only manage what you can measure.”
No one metric that will give you all the information you need to run your business well. No one question can give you all the answers.
With so many methods and techniques being used to measure customer satisfaction, the question remains – What is the best measure to predict future performance?
Customer who gives a high rating on Customer Satisfaction is definitely satisfied with the service and/or product that you provide. However, does this mean the same customer will recommend you to family, friends, or colleagues?
Net Promoter Score (NPS) is as important as Customer Satisfaction (CSAT). In fact, some believe that NPS is a better measurement of company’s success. Its purpose is to assess the extent on which respondents will recommend a certain company, products, or services to family, friends, or colleagues.
Usually only one question is asked to determine the NPS – On a scale of 0-10, how likely would you recommend [your company] to your family, friends, and/or colleagues?
The scores are usually split into three categories:
- 9-10 = Promoters (loyal customer advocates who continuously patronize your products and services; expect positive word of mouth from them)
- 7-8 = Passive (somewhat satisfied customers, but are susceptible to lose to competitors; expect both positive and negative word of mouth from them)
- 0-6 = Detractors (dissatisfied and unhappy customers who can damage your brand; expect negative word of mouth from them)
To calculate, subtract the percentage of promoters from the percentage of detractors.
Promoters – 30%
Passive – 50%
Detractors – 25%
30% (Promoters) – 25% (Detractors) = +5 (NPS)
The NPS is not expressed as a percentage, but as an absolute number so do not put % after your NPS. Your goal is to always be on the positive or > 0.
Since the question states “how likely”, NPS on its own, doesn’t make an accurate indicator to predict future performance or growth potential. There’s still an ongoing debate about the use of NPS and some Marketing experts even are skeptical. They argue that the concept of NPS is too simple and provides insufficient data. Another argument is that NPS does not accurately measure and predict customer behavior.
Despite the possible drawbacks of NPS, we cannot discount it completely. It provides important information and measurement to use in collaboration with other metrics such as CSAT and Customer Effort to have a holistic picture and understanding on customer behavior. (I will discuss Customer Effort in my succeeding blog posts.)
Bottom line is that you would like all of your customers to recommend your company to family, friends, and colleagues. You want them to be your advocates.
RetailWise USA’s signature survey program, ExitShopping®, provides you a report that incorporates elements of NPS, CSAT, and Customer Effort.