Net Promoter Score

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The Net Promoter Score (NPS) or promoter surplus is a key figure that correlates with the company's success (in certain industries). The method was developed by Satmetrix Systems, Inc., Bain & Company and Fred Reichheld .

calculation

The Net Promoter Score is calculated from the difference between promoters and detractors of the company concerned. The proportion of promoters and detractors is determined by asking a representative group of customers only the question: “How likely is it that you will recommend company / brand X to a friend or colleague?” The answers are measured on a scale of 0 (unlikely) to 10 (extremely likely). Customers who respond with 9 or 10 are called promoters. Those who answer 0 to 6 are considered detractors. Customers who answer with 7 or 8 are considered "indifferent". The Net Promoter Score is calculated using the following formula:

NPS = promoters (in% of all respondents) - detractors (in% of all respondents)

The value range of the NPS is between plus 100 and minus 100.

rating

The advantage of the NPS is its simplicity. Fred Reichheld has empirically proven the correlation between NPS and company growth for over 30 industries and determined corresponding benchmark values. However, an extensive study in which the results reported by Reichheld were to be replicated found no meaningful connections between NPS and company growth. It is also reported there that the relationships between the NP score and actual customer behavior (financial volume of purchases made) are also weaker than with other measures of customer loyalty. In addition, various serious methodological deficiencies of the NPS are discussed by other authors. Mention is made, among other things, of the arbitrary division of the scale into detractors and promoters.

At first glance, this concept seems very charming due to its simplicity and the apparently associated low costs and has replaced the classic, process-oriented customer satisfaction measurement in many companies in recent years. However, it is often used incorrectly or at least incompletely. According to Reichheld, measuring the Net Promoter Score begins a long and sometimes complex process, the core of which is the analysis of the answers to the subsequent “why” question within (many) focus groups. It is only in these focus groups that it is determined where the actual causes for a high or low recommendation are and which measures can be used to increase the recommendation rate. Ultimately, the calculation of the Net Promoter Score should not be significantly cheaper than a classic customer satisfaction measurement from a purely cost perspective.

One disadvantage is that the studies that report a relationship between NPS and sales growth in various industries so far only come from the USA and Great Britain. Even if one assumes that these - currently controversial - results are valid, they cannot easily be extended to other countries and cultures. The benchmarks that Reichheld has determined cannot simply be transferred to the German cultural area because the response behavior is sometimes different here. In order to use the NPS here, own benchmarks would first have to be determined in the national context.

Research on the subject of NPS has evolved over the past few years: we now speak of the Net Promoter System instead of the Net Promoter Score. The core element of the system is to initiate change processes in the company based on customer feedback. If the NPS is used correctly and supported by a Customer Experience Management (CEM) system, the following can be achieved:

  • Detractors identified during the survey can be contacted and the causes for their poor rating can be eliminated.
  • Promoters are identified as such. They are friendly to the company and can be helpful to the company if they are available for case studies or can be included in the product development process, etc.
  • Conceptual and strategic improvement measures can be identified and implemented on a departmental or divisional basis. Both middle management and upper management can recognize which measures are required to center the organization on the customer.

The NP score has cultural influences. He can help assess whether the implemented improvement measures are having an effect. A distinction must be made between the relationship NPS, which assesses willingness to recommend based on the experience gained, and the transactional NPS, which evaluates the recommendation based on a single transaction (e.g. product delivery).

Web links

Individual evidence

  1. ^ Frederick F. Reichheld: The number one you need to grow . In: Harvard Business Review , 12/2003, pp. 47-54
  2. ↑ TL Keiningham, L. Aksoy, B. Cooil: Linking Customer Loyalty to Growth . In: MIT Sloan Management Review , 2008, pp. 50-57.
  3. ↑ S. Ruf: Would you recommend this method to a friend? In: Association of Swiss Market and Social Researchers (ed.): Yearbook 2007 , pp. 38–40.
  4. ^ L. Freed: Rethinking Net Promoter: Serious Flaws Tarnish Simple Idea . ForeSeeResults Whitepaper, 2007.
  5. ↑ Ralf Lisch offers a comprehensive review of the Net Promoter Score : Measuring Service Performance - Practical Research for Better Quality. Routledge, Farnham 2014, ISBN 978-1-47241-191-4 , pp. 152-155. Lisch makes it clear that the NPS is unsuitable as a key performance indicator due to considerable methodological and methodological weaknesses .