Sales management

What Is the NPS and How to Use It in Your Business?

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The NPS is the most widely used satisfaction measurement tool in the business world. 

However, this was not always the case. 

It became popular just over 15 years ago, when an HBR article talked about the methodology and its presentation in society.

What is the NPS?

NPS stands for Net Promoter Score. 

It is an index from 1 to 10 that aims to classify clients into 3 groups:

  • Detractors
  • Passives
  • Promoters

With this information, we can get clues as to the level of satisfaction and loyalty of our customers

Originally, it was even understood that they correlated with the company's growth possibilities.

How is the NPS calculated?

The way to calculate it is very simple and possibly one of the reasons for its popularization. 

It consists of asking, simply, "on a scale of 1 to 10 how likely are you to recommend this service (or product) to a friend?" 


nps example

Those users who answer with an 8, 9 or 10 are qualified as promoters. 

Those users who answer with a 6 or a 7, as passives. 

The others are considered to be detractors.

Why has the NPS become a business standard?

When it was developed by Andy Taylor, CEO of a car rental company, it revolutionised the system of obtaining customer feedback. 

His company started to survey all customers with only 2 questions:

  • One about the quality of the rental experience
  • Another one about the possibility of them doing it again

As you can see, the original process is far from the current one, but it was a brutal change of paradigm. 

The process was so fast and simple that it allowed Taylor's firm to provide real-time feedback to improve its service to its 5,000 branches in the United States. 

Before this, the method of collecting feedback was long and unhelpful satisfaction surveys:

  • Because they were long, there was a high dropout rate
  • Being complicated, the answers were ambiguous and not well thought out
  • Not too many actions were done 
  • As they were not audited either, the management did not give them much weight

With all this in mind, the revolution brought about by the NPS is better understood.


Problems with the NPS.

However, not all that glitters is gold. 

The obvious objection when this system was introduced was: 

"If we only focus on the promoters, what about the rest of the clients? Wouldn't it be better to track other data in a more sophisticated way?" 

The answer at the time was that by focusing on the promoters, the company could speed up its growth process. 

It might have made sense then, but now, technology allows us to go much further. 

Another more current objection is that the NPS does not really capture a person's recommendation intentions. 

According to a 2007 study of 16,000 consumers, only about half of the people who expressed their intention to recommend a firm actually did so. 


problems of NPS

In fact, it has become clear that, in many cases, we advise against and recommend the same brand to different people. 

Research by a consultancy found that when, where, why and to whom consumers praised or criticised a brand was a fluid concept and seemed independent of their NPS ratings. 

One example from the study was a Spotify user who recommended the service to a friend because it was cutomisable, but advised his parents against it because it was complex and expensive. 

Another interesting example was that of a consumer who hated Walmart because it was always dirty and disorganised but who recommended it to a friend to buy a desk on sale.

How to balance the different aspects of the NPS?

It is true that it is convenient and elegant to ask a single question to validate such an important metric in business, but, at the very least, it should be asked at several points in the customer's journey

Imagine a person who decides to book a hotel room. 

During the booking, the payment gateway fails several times and that makes you uncomfortable. If you were asked then your NPS would be a 2. 

When checking in, however, you are allowed 4 hours earlier, and your NPS would be 8. 

When they arrive at the room they discover incredible views and a very nice room. Your NPS would be a 10 

However, at check-out time, you are not allowed to be even 1 minute late. Your NPS at that time drops to 1. 

In the end, on the way back to your home, when you evaluate your entire stay, your NPS is set at a 6. 


NPS example

If the hotel only measures your NPS after your stay, you will get a 6, which will not tell you much about whether or not they will actually recommend the hotel. 

Nor did they find out what had caused that note: What are the points for improvement? What are the strengths? 

By auditing the client's entire Journey with different NPS you can find the perfect time to ask for a recommendation and the areas of improvement to trigger the average score of your NPS.

But what cannot be measured, cannot be improved.

And the king of data management tools is the CRM. 

efficy is the most flexible on the market, which is why it is used by 4,500 customers in 33 countries. 

Do you want to see how it can help you? 

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