Net Promoter Score, or NPS, is probably one of the most well known and widely used customer KPIs. Despite its popularity in different types of organisations globally, there are some common pitfalls when it comes to this metric. These issues range from inaccurate measurements to linking extreme targets to just NPS numbers. In this article, we’ll discuss ways to avoid these pitfalls so you can get NPS right in your organisation.
What is NPS?
First, a quick recap of what Net Promoter Score is. NPS is a single question metric: How likely is it that you would recommend [Product / Service / Organisation / Brand] to a friend or colleague?’. It measures customer loyalty by asking customers to indicate the likelihood on a scale of 0-10. The resulting score ranges from -100 to +100, but the calculation will be discussed later.
It’s desirable to have a higher score, as this indicates your customers are more likely to recommend your organisation. A higher recommendation intention is a strong indication of a better customer experience.
Why NPS is a great customer-centric metric
Let’s start off by saying that despite there being some issues surrounding NPS, it’s a great metric. Being just one question, it is easy to complete, easy to understand and encompasses a few different aspects. Here are some of the reasons NPS is a solid metric:
- Firstly, it encompasses a customer’s sentiment in a clear and understandable score. Because NPS focuses on an intention to recommend, it goes beyond regular customer satisfaction. It becomes more personal to most customers, as it also involves their social environment.
- NPS is also a good indicator of customer loyalty and retention. By asking about the likelihood of recommending a brand, transaction, process or organisation, the score also indirectly incorporates the intention to repeat this experience.
- Lastly, NPS is easy to connect to any business. Recommendations are a great way to gain new customers, so a large group of promoters can result in additional revenue for your business. The connection to additional revenue makes NPS a great metric to build a business case with. We’ll discuss some follow-up questions later on in the article, making it even easier to build a business case for improvements that can help increase your NPS.
So let’s dive into a few ways to incorporate NPS into your organisation the right way.
1. Choose the right type of NPS
You’ve probably heard of some different types of NPS, usually indicated by adding an additional letter in front of the NPS abbreviation. We’ll highlight three types of customer NPS in this article: tNPS, jNPS and rNPS.
|Type of NPS
|When to use
|tNPS or transactional NPS
|Based on your recent [transaction/ visit/ purchase / experience], how likely are you to recommend our organisation to a friend or colleague?
|The most detailed level to measure NPS. Use when you want to know the experience on a Touchpoint level within a specific channel (e.g. directly after a service call, or an action on the website)
|jNPS or journey NPS
|How likely are you to recommend [name of journey or process] to a friend or colleague?
|When you want to know how the entire journey (a customer’s life event) is experienced. An example of a journey to measure using jNPS is onboarding. It is a combination of different interactions resulting in a finished or unfinished job to be done.
|rNPS or relational NPS
|How likely are you to recommend our [brand / organisation / product / service] to a friend or colleague?
|Provides insights into the overall loyalty and enthusiasm. It gauges the relationship over a period of time (a year, quarter, etc.). This type of NPS focuses on the overall relationship a brand or organisation has with a customer.
You can use multiple types of NPS simultaneously, but please make sure to select the appropriate level of detail for the insights you’re hoping to gain.
2. Include your employees when using NPS
In addition to these three types of customer NPS scores, there is another important type of NPS to consider from a different group. The eNPS or employee Net Promoter Score. It’s also a single question metric: How likely are you to recommend this company as a place of work? eNPS is just as important as the types of customer NPS.
Just as customer NPS is an important indicator of customer loyalty, eNPS does the same for employee loyalty and engagement. Higher employee loyalty leads to lower costs and higher employee engagement is an important driver of customer loyalty. If that wasn’t enough, a high eNPS can potentially make it easier for you to recruit new employees as well through positive word of mouth.
You should also include your employees when it comes to your customer NPS, by communicating the performance regularly. NPS is an understandable metric, making it extremely suitable to communicate with your employees. Every employee has a direct or indirect influence on customer experience. By highlighting the influence they have on the NPS, it becomes a shared responsibility within your organisation.
3. Calculate NPS correctly
After being presented with an NPS question, your customers can indicate their recommendation intention ranging from 0-10. Based on these scores, you’ll be able to sort your respondents into three categories.
Customers that have responded with a 9 or 10 score, indicating positivity toward your transaction, journey or brand and a high recommendation intention.
Customers that have responded with a 7 or 8 score,indicating they aren’t likely to recommend to others but also aren’t likely to spread negative word of mouth. Because the influence of passives is neutral, this category is excluded from your calculation.
Customers that have responded with a 0-6 score, indicating negativity toward your transaction, journey or brand. They aren’t likely to recommend to others, but could spread negative word of mouth.
There is also an alternative calculation, putting the customers that score 8 in the promoter category with the 9s and 10s. The passive category includes 6 and 7, detractors range from 0-5. This alternative calculation is commonly referred to as European NPS, because they generally score lower than American respondents. Most organisations use the traditional calculation, so keep this in mind when benchmarking your NPS.
4. Select the proper benchmark for your NPS
Now that you know how to use NPS in your organisation, you’ll likely want to know what a good score is. There is no definitive answer on what a good score is. This strongly differs per region and industry and can even differ for the type of NPS you’re measuring. Because NPS is used by many organisations and often included in market- or customer research reports, it shouldn’t be too difficult to find a comparison that’s relevant for you.
One of the common pitfalls when using NPS is placing too much focus externally. It’s understandable that you’d want to beat the score of your biggest competitors. But the most important benchmark when monitoring NPS performance is your own previous NPS scores or base measurements.
It’s more beneficial to your customers to improve your organisation’s performance based on customer insights, than to outperform the score of your competitors. Customer insights and using the -100 to 100 score brings us to another important way to do NPS right: asking the right follow-up questions.
5. Ask the right follow-up questions when using NPS
Tracking NPS performance based solely on the resulting score means you disregard why customers are giving you this score. These insights are important to improve your NPS over time and to ensure you will positively impact your customers’ experience. So although the NPS itself is based on a single question, we believe it should always be accompanied by at least two follow-up questions.
- Why did you select this score / what are the reasons for selecting this score?
- How can we make the [experience / the transaction / this process / product / service] better?
You can always include additional follow-up questions, but these two should provide you with sufficient insights to improve your customers’ experiences. It will also provide teams responsible for projects or tasks related to NPS with some important context to better understand customers.
If you need additional input for a business case, there is an additional follow-up question you can include. How many times did you recommend our [organisation / product / service / journey] in the past [specify period of time]? Although this method isn’t a reliable way to get an overview of recommendations that have been provided, it will give you an indication of how many times customers have recommended. Adding these answers to your NPS will help you create your business case.
Applying these five tips in your organisation will ensure the basics of your NPS metric are covered correctly. If you need any additional help setting up customer metrics, or want to delve deeper into the minds of your customers, you can reach out for some help. The Milkymap platform offers you the opportunity to incorporate the NPS metric into your Customer Journey Maps, as well as allowing you to monitor NPS performance.