Tools we use for eliciting customer and stakeholder feedback include the Net Promoter Score and mystery shopping.
The Net Promoter Score
The Net Promoter Score (NPS) is a tool to generate customer feedback and therefore drive improvements. Its designer anticipates that it will become more widely used and develop a methodology as well tested as accounting practices. Companies that improve their NPS typically experience impressive business growth. Much of its reported application has been in big business. This article backgrounds the NPS as a tool and identifies how it might be used in New Zealand.
This article draws heavily on the book The Ultimate Question: Driving Good Profits and True Growth by Fred Reichheld (2006). Our intention is not to critique the tool, it is to trial it and to consider its possible applications.
Fred Reichheld has an international reputation and was listed as one of the top 25 consultants of 2003 (Consulting Magazine, 2006). His earlier books are The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value (Reichheld, 1996) and Loyalty Rules! How Today’s Leaders Build Lasting Relationships (Reichheld, 2001).
He has since written a 2011 edition of this book The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World.
Reichheld’s concept of the Net Promoter Score was first presented to his colleagues in Bain and Company in mid 2002. In December 2003 the concept emerged publicly as the article The One Number You Need to Grow in the Harvard Business Review (Reichheld, 2003).
The Net Promoter Score
The NPS is based on one question: How likely is it that you would recommend this company to a friend or colleague? Participants choose a point on a ten point scale.
Promoters score the company 9 or 10. These are the people who will actively advocate for the company accounting for “more that 80 percent of referrals” (Reichheld, 2006:30). Passives rate the company 7 or 8. They are motivated more by inertia than by loyalty and will move to another company if they are offered a better deal. The detractors, scoring 0 to 6 generate more than 80 percent of negative word of mouth comments. Too many of these debilitate a company.
Rather than a randomly generated likert scale, the three categories are based on research that correlates customer behaviour to their willingness to recommend the company.
The scores are then calculated to generate the net promoter score.
P – D = NPS
Percentage of Promoters (P) – percentage of detractors (D) = Net Promoter Score (NPS).
We can assume that most companies would receive a low score. The highest score reported in The Ultimate Question is 82% by USAA an insurance and financial services provider to the military. Close behind on 81% is Harley Davidson, also known as the company whose brand is most likely to be chosen as a tattoo (Peters, 2006).
Click here for a pdf copy of the full article. NPS
How we use the NPS
The process is simple.
- You provide an email database (we can work through this if you don’t have them readily available.
- We communicate with your customers and ask them to participate in an online survey.
- We analyse the results and explore the themes we tease out with you.
- We provide some recommendations to improve your score and business growth.
Our mystery shoppers help you to get an objective view of your customers shopping experience.
Contact us to enquire about the NPS, mystery shopping or other services.