Marketing Insights, Tips & Tricks

Net Promoter Score Explained in 32 Seconds

Philips have come up with an animation which sums up Net Promotor Score in 32 seconds. Net Promoter Score (NPS) is a black art which allows companies achieve profitable growth by focusing on their customers and maintaining their loyalty.

If you’re not familiar with NPS, it’s based on asking customers this question:

How likely are you to recommend <COMPANY> to a friend or colleague?

The survey monkeys (I mean customers) are categorised as “Promoters,” “Detractors,” or “Passives” based on their answers. The Net Promoter Score (NPS) is calculated by subtracting the percentage of Detractors from the percentage of Promoters (Passives are ignored).

You’re probably wondering if many companies use it well according to The State Of Customer Experience Management, 2011:

  • 48% of large companies (more than $500M in revenues) are using NPS
  • 67% of those using NPS report positive results (15% say it’s too early to tell)
  • 84% of large firms with voice of the customer programs (including those that use NPS), report success from those efforts

Here’s a few tips from our experience with Net Promoter Score:

  1. NPS is not the holy grail of marketing. It’s just one metric.
  2. The key questions to ask  is “Why”.
  3. Make sure you map NPS to segmentation. All feedback is not equal.
  4. Focus is on identifying what’s “driving” advocacy and customer behavior.
  5. Like anything focus on a long term journey.

 

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