Introdutcion to Net Promoter Score® and Net Promoter .Introdutcion to Net Promoter Score® and Net

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  • IntrodutciontoNetPromoterScoreandNetPromoterSystem

    InsightSofaautomatecollectionandevaluationofNPS

    IntroductiontoNetPromoterScoreandNetPromoterSystem

    Updatedissue:2016

    InsightSofa.comisamemberofROUCEKGroups.r.o.

    Allrightsreserved|2016

    Theaimofthisshortpublication isabasic introductiontoNetPromoterSCORE,a

    methodformeasurementandevaluationofCustomerfeedback.Itwillexplainhowto

    measure thismetric,how to calculate it andhow toproject its results to companymanagement.Itsgreatestadvantages(anddisadvantages)willbebriefly introduced

    and in the end, the differences between Net Promoter Score and Net Promoter

    Systemwillbeexplained.

    NetPromoter,NPSandNetPromoterScoreareregisteredtrademarksofSatmetrix

    Systems, Inc.,Bain&CompanyandFredReichheld.AllrightstothispublicationarereservedforInsightSofa.com.

  • IntrodutciontoNetPromoterScoreandNetPromoterSystem

    InsightSofaautomatecollectionandevaluationofNPS

    For starters You'veprobablyalreadyheardthetermNetPromoterScore.It'sperhapsthemosteffectivemethod tomonitor customer satisfaction,quantify it and integrate it into

    companymanagement.Muchof theavailable research showed that thegrowthof

    customersatisfactionandloyaltyleadstoademonstrableincreaseinturnoverandtoso-calledhealthyprofits.WhenstartingtotalkaboutNetPromoterScore,wecan't

    beginotherwisethanbymentioningFredReichheld,thefatherofthismethodology,

    whichisadoptedeverydaybymanytopcompaniesaroundtheworld.

    FredReichheldworkedattheBain&Companyconsultingfirmsince1977.Sincethen

    he's been focusing on research of customer satisfaction and customer loyalty inconnectionwiththecompanymanagementandassociatedeconomicindicators.He's

    probablybestknownforhisworkonNetPromoterScoreandconsideredthefounder

    of thismethodology. Hismost famous book "The Ultimate Question" explains thestrengthofthe"singlequestion"andisasteppingstoneforthedevelopmentofNet

    PromoterScore.Hiscontinualexplorationoftheimpactofcustomerloyalty(notto

    beconfusedwithsatisfaction)onthebusinessmodelsofcompaniesawardedhimwithtitles such as "the high priest of the loyalty cult" (The Economist, 2001) or his

    appointmentamongthe25bestconsultantsintheworldbytheConsultingmagazine

    (2003).

  • IntrodutciontoNetPromoterScoreandNetPromoterSystem

    InsightSofaautomatecollectionandevaluationofNPS

    NPS as a number (Net Promoter Score) NetPromoterScoreisextremelypopularinmanyareasofcorporatemanagement:marketing,sales,customerservicecenters, topmanagement-virtually inanyarea.

    Especiallybecauseit'seasilymeasurableandtheresultscanbecomparedovertime

    orusedinbenchmarkingamongindividualcompanies.

    NetPromoterScore isonlyapart -albeitavery importantandperhaps themost

    famouspart-ofthewholetheNetPromoterSystem.NetPromoterScoreisasinglenumberexpressingthedegreeofloyaltyofcustomerstotheorganization.Customers

    areaskedhowmuchtheywouldrecommendyourcompany/product/servicetotheir

    familyandfriendsonascaleof0-10.Doesthatseemsimpletoyou?Basically,youareright-that'swhatthemetricisbasedon.Butasweshowbelow,ifyoucombinethis

    simple sentencewithadditionalquestions (preferablydependingon theevaluation

    score) you'll start getting very interesting data based on actual opinions of yourcustomers.Let'stakeamomenttogobacktoNetPromoterScore.

    Dependingontheratingtheyawardedonascalefrom0to10,yourcustomersareclassifiedintothreebasicgroups:detractors,passivesandpromoters.

    Let'stakeacloserlookateachgroup.

  • IntrodutciontoNetPromoterScoreandNetPromoterSystem

    InsightSofaautomatecollectionandevaluationofNPS

    DetractorsDetractorsarecustomerswhoindicatedtheirloyaltytoyourorganizationbetween0

    and6onthescale.Theycertainlyaren'tsatisfiedcustomers.Theyaretellingyouthatafteranexperiencewithyourcompany,productorservice,theywoulddefinitelynot

    recommendittotheirfriends.Itisadvisabletotrytoworkwiththesecustomersto

    addresstheirbadexperienceassoonaspossible.

    Butnothingisassimpleasitmayseematfirstglance.Puttingthecustomerintothe

    detractorsgroupjustonetimedoesnotnecessarilymeanthatthecustomerisyourdetractoroverall.Letmegiveyouanexample:

    Yourregularcustomerregularlyvisitsyourwellnessstudio.Heusuallyordersamudbathandisverysatisfied.OnedayhedecidestotrytheThaimassagewhichdoesnot

    satisfyhimverymuch.Ifyourcallsforasurveyaresetuptoactivatedependingonthe

    useofaspecificservicebythecustomer,it'slikelythatafterleavingthemassage,thiscustomerprobablydoesnotgiveyouaveryhighsatisfactionratingandcanbecome

    your"short-term"detractor.

    Thisexampleshowsan importantcaveat -alwayswatchNetPromoterScoreover

    time. If you view the average ratings of a customer (or customers) you'll get an

    accuratepictureofyourcustomerloyaltyandtheactualvalueofyourNetPromoterScore.

    Detractorshaveagreatpropensitytoswitchtocompetingservices,stopusingyourserviceorevenspreadnegativemessagesaboutyou.Surveysdemonstratedthatover

    80percentofthenegativereportsthatarecirculatingaboutyourcompanycomefrom

    detractors.

  • IntrodutciontoNetPromoterScoreandNetPromoterSystem

    InsightSofaautomatecollectionandevaluationofNPS

    It is therefore important towatch them and address all their requests in a timely

    manner.

    PassivesPassivecustomersarethosewhoratedtheirloyaltytoyourorganizationbetween7

    and8on the scale. Theseare customerswhoaren'tdissatisfied,but they certainly

    knowhowyoucouldmakeyourservices/productsevenbetter.Idonotrecommendunderestimating thiscustomergroup.Theopinionsofapersonwhocan findsome

    weaknesses is always worthmore to you than one who is completely satisfied or

    chronicallydissatisfied.

    Passivecustomersdon'tspreadnegativemessagesaboutthecompany,havealower

    propensitytoswitchtocompetitionandaremoreeasilysustainable.

    PznivciPromotersarethecustomerswhoaremostloyaltoyourorganization.Theyratedtheirloyalty between9 and10on the scale. These customers spreadpositivemessages

    aboutyourcompanyamongtheirfriendsandtheyaretheleastlikelytoswitchtoa

    competitor.It'seasytosellthemallyournewproducts/servicesandimprovements.Youshouldreallypamperyourpromoters.Remembertherulethatretainingacurrent

    customeris10timescheaperthangettinganewone.

  • IntrodutciontoNetPromoterScoreandNetPromoterSystem

    InsightSofaautomatecollectionandevaluationofNPS

    The method of calculating Net Promoter Score NetPromoterScore isnotthespecificnumberthatthecustomermarksonascalefrom0to11.NetPromoterScoreindicatestheoverallresultforyourorganization,

    whichisakindofsingle-numbermetricthatsummarizestheloyaltyofyourcustomers.

    Let'sseehowtocalculatethisnumber.

    NetPromoterScoreisthedifferenceofthepercentageofpromotersanddetractors.

    Theoppositeextremesthereforearethateitherwehavea100percentofpromoters

    or100percentofdetractors.NetPromoterScorevaluesmaythereforehaveavaluebetween-100to100.Ifwehavemorepromotersthandetractors,theNetPromoter

    Scorevaluesarepositive;ifthereisamajorityofdetractors,theyarenegative.

    Surely you're asking -what is the normal value formost companies?What values

    shouldyouachieve?Thereisnoexactanswer.Ofcourse,thehigherthebetter.Look

    atthetablebelowtomentionafewexamplesofwell-knowncompaniesandtheirNPSvalues.

  • IntrodutciontoNetPromoterScoreandNetPromoterSystem

    InsightSofaautomatecollectionandevaluationofNPS

    Company NetPromoterScore

    Apple 78

    Amazon 71

    eBay 69

    Facebook 65

    Google 63

    SAP 60

    Sony 41

    Adobe 36

    AT&T 9

    Net Promoter Score = perception in context I've been reconsidering for a long timewhether our introduction toNet Promoter

    Scoreshouldincludethischapter.ButfinallyI'veseenthatwe'llencounterthisissue

    soonerorlater,soIdecidedthatyoushouldlearnitearlyon.NPSisundoubtedlythebesttechniqueformeasuringcustomerloyalty,butlikeeverythingelsethismetrichas

    its negative aspects. However, if you understand them well and perceive NPS in

    context,itwillworkexactlyaccordingtoyourwishes.

    What do I mean by perception in context? Unsurprisingly, the simplicity of this

    methodology (which is already beginning to understand that the greatest strengthNPS)isalsoitsmostcriticizedpart.Itisquiteobviousthatthescalefrom0-11doesnot

    fitall respondents,willdependonrespondents'personalitytypesandsocialstatus.

    Soonyou'llobservethatdifferentratingsaregivenbypeoplefromvariousgeographicpartsoftheworld,variousreligiouscultures,etc.SometimespeoplejustchooseNPS

  • IntrodutciontoNetPromoterScoreandNetPromoterSystem

    InsightSofaautomatecollectionandevaluationofNPS

    valueof10,eventhoughtheyarenottoohappy.Somegroupschoose7whenthey

    areverysatisfied,justtoleaveafewpointsofheadroomforimprovement,whichtheythinkcanbealwaysdone.ButifyouperceiveNetPromoterScoreinthecontextof

    thesevariousgroups,itwillstillprovideyouwithhighqualityandaccuratedata.Let's

    lookatsomeexamplesforbetterunderstanding.

    Widercontext

    Imaginethatyouvisitawellnesscenterwithyourspouseorpartnerfortheweekend.Thewholestayisverypleasant,yougetagreatdealofrest,servicesaretop-notchand

    you dont have the slightest problem agreeing on your choice procedures. After

    returningyou'resohappythatyoudecidetoorganizeacorporateteambuildingatthesamelocation.However,whenyougettherewithyourco-workers,youcannotagree

    asagroup,whatyouwanttodo.Thusonehalfchoosestheirownentertainment,the

    other half chooses procedures. Despite the fact that the services provided by thewellness center are still top-notch, the rating indicated by the participants of

    teambuildingwillprobablydifferfromthescoresindicatedbyyouandyourspouseor

    partner.

    Solution:Identifythegroupsofyourcustomers,segmentthet