Using NPS® to Measure Your Customer Loyalty

Confirmit Team

Confirmit Team

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Confirmit’s dedicated teams work to deliver world-leading customer experience, Voice of the Employee and Market Research solutions. 

Author Bio

One of the questions clients focused on customer satisfaction and loyalty often ask me is “how do my NPS scores compare to others?”  NPS, or Net Promoter® Score , is a metric for measuring customer loyalty, based on the question: “Please rate your willingness to recommend us to a friend or colleague." The Three Segments of Net Promoter Score (NPS) are Promoters, Passively Satisfied, and Detractors, and they are typically determined using a 0-10 or 1-10 scale.  The NPS score is determined by subtracting the percentage of responses that rated a 0 through 6 (Detractors) from the percentage of responses that rated a 9 or 10 (Promoters). The end calculation of this is your NPS score. Note that the Passively Satisfied individuals, those that rated a 7 or 8, are not included in the calculation.

While NPS benchmarks by industry and best-in-class scores exist, there are really no better scores to benchmark yourself against than your own.  Really, the most important thing to remember is that you are looking for improvement.  When thinking about comparing your scores with other companies, please remember that there are many things that can affect your NPS score – including the industry you’re in, the type of products you sell, where you sell your products, who you sell your products to, the economy, etc.

Also, remember that NPS is only a single metric, one of many that should be tracked and monitored to measure performance.  NPS should not be relied upon alone, any more than a pilot would rely on a single gauge in the cockpit to monitor his flight.  Use NPS in conjunction with overall customer satisfaction scores and other actionable measures (like detailed performance metrics, individual customers’ scores, etc.) to garner the greatest insights into your performance.

Based upon conversations with clients using NPS, I would suggest the following strategy for benchmarking NPS:
 1)    Establish your own benchmark

• The only benchmark that is applicable for you is your own. Measure for a time period (a quarter, a year) and then set the average as your baseline.
• Set a goal for increasing your NPS score year over year. The important thing here is to improve.  Do not get caught up in determining by how much.  How much depends on several factors that are usually out of your control – budget, ability to make changes based on data, resources to affect change, internal company culture, economy, etc.
• Year over year, or rolling 6-12 months is the best way to trend, as you will most likely see dramatic changes in scores from month to month or quarter to quarter.  See point #2 below.

2)    Watch your mix

• Develop a sample plan that allows you to keep your survey population mix as comparable as possible from time period to time period.  For example, if 75% of the people you survey in  Q1 are in North America and in only 40% of the people you survey in Q2 are in North America, you will see dramatic differences in your trending.
• Typical things to think about when developing your NPS survey sample plan include:

What type of people are you surveying?  Titles, positions, and other factors affect survey scores.

Where are the people you’re surveying located? Certain countries will typically not give high scores of 9 or 10 out of 10 when responding to surveys, so is NPS the right metric when measuring that region?  Whatever you decide, the mix of countries should be comparable.

How long have your survey respondents been clients? If your Q1 sample is 75% customers that have been with you 3 years or more and your Q2 sample contains only 40% of customers that have been with you 3 years or more, this could dramatically affect your trending.

Where in the survey are you asking your key satisfaction question? If you ask it at the beginning of the survey, you will get a higher number of people responding to that question, but only a “top of mind” answer.  If you ask at the end, you may get fewer responses, but the responses you do get will be more thought out after the respondent gets more context as they answer all the other survey questions.

What languages did you use for the survey? Survey respondents may not understand the questions if they’re not written in their primary language.  If you translate a survey written in English to other languages, it is imperative that the translation is done in a way that explains the key question properly.
These are just some of the many things to think about when using NPS as a metric, but perhaps most importantly, don’t lose sight of the fact that there are many other metrics out there that may be more useful to your organization – such as the Secure  Customer Index  and those mentioned by SimplexGrinnell’s Karl Sharicz in his blog post on key customer loyalty metrics.
  * Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld.

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