The Net Promoter Score^® (NPS^®)

The Customer Groups: Promoters, Indifferents, and Detractors

After collecting data, the Net Promoter Score is determined based on the three possible groups that the customers fall into: Promoters (fans), Indifferents or Passives (undecided), and Detractors (dissatisfied). The total score for the evaluated company derives from the percentage of promoters minus the percentage of detractors. Depending on the value, the value is between -100 and +100. The lower the calculated value, the less satisfied the customers are and the less likely they would recommend the company.

Die drei Kundengruppen, die anhand des NPS voneinander unterschieden werden, sind im Detail wie folgt charakterisiert:

• Promoters (9-10 points on the scale):
  These “fans” of a company are a very significant group. They are loyal customers who actively recommend the brand and thus help to win new customers. The goal of the effort should be to attract as many promoters as possible.
  
  
• Indifferents or Passives (7-8 points on the scale):
  These are „passive“ customers who have already bought but are now more of an undecided. They are not 100 percent satisfied and a recommendation is rather unlikely.
  
  
• Detractors (0-6 points on the scale):
  These critics do not have a good opinion of the company and advise friends, acquaintances, and other potential new customers not to buy. This can be based on a single bad experience with a service or product. Detractors are important drivers of improvement and their comments should be taken very seriously.

Comparing the Net Promoter Score

The data obtained clearly shows the marketing department which way the wind is blowing and highlights potential for both improvement and new strategies. Ongoing use of NPS enables benchmarking, both for internal control and for external comparison with competitors. By comparing your previous values with current ones, you can also track the relative success of your own strategy implementation. This supports companies in maintaining their competitiveness. Evaluating the additional comment provides the company also receives unfiltered feedback and therefore valuable information on the specific customer pain points. Such customer feedback is of enormous value for the further development of every company

In short, a comparison of scores with that of competitors or, if applicable, your own partner company only makes sense within the same country and industry. Mentality and service expectations differ from country to country. For example, the average NPS in Germany falls generally rather low in international comparison. Whilst customers in the USA express their fullest satisfaction with a 10, this value is lower in Germany and China and is 7 to 8. In Malaysia too, the maximum value is 7, and points 8 to 10 are practically not used. In Germany, a rating between 7 and 8 can be considered very good, which must also be taken into account when evaluating the numbers.

Individualizing NPS Surveys

Each survey should be tailored to its own target group, both in terms of design and content. It goes without saying that a survey should fit into the design of the website or online shop and should not be perceived as disturbing. This raises the participation rate. Setting up the survey based on the language used by the target group removes an additional hurdle to participation.

Another important aspect is the individual design of the NPS scale. While it ranges from 1 to 10 by default, companies can increase the meaningfulness of the Net Promoter Score by adjusting and shortening the scale. However, it should always have an odd number of values in order to make neutral opinions possible. Since many factors such as usage habits, education, and age are often not known, it is important to make the scale as simple as possible.

Time Intervals for Determining NPS

Raising and increasing customer satisfaction is an effort that companies should track permanently to stay competitive in rapidly changing markets. The combination of ongoing, selective use of relationship and transactional surveys brings optimal results. Companies typically collect the Net Promoter Score quarterly, semi-annually, or annually. However, analysis at shorter intervals offers the opportunity to react faster to customer dissatisfaction and „turn the frown around“.

Practical calculation of the Net Promoter Score

Once the survey results have been processed, the calculation begins. Basically, the score is made up of the difference between detractors and promoters. It can be calculated in two ways.

Keeping in Touch with the Customer: Feedback Loops

On their way from prospect to customer, the user interacts with the company at many points on the customer journey. Continuous surveys within the Net Promoter System provide information about satisfaction all along this path - but the choice of touchpoints to survey depends on the goal and type of feedback needed. The multi-stage process of collecting feedback and the company’s response to it takes place within feedback loops which usually come to an end with the completion of a purchase or the handling of a complaint.

The enterprise analyzes the feedback received from customers along the customer journey and converts these into concrete measures which may then also entail further customer interactions. In this way and under certain circumstances customer behavior can be influenced. A short online survey could be activated after the end of a service call, or immediately after completing a purchase, for example.

An optimally executed feedback loop opens the door to requesting positive customer reviews on evaluation platforms. It is important to inquire about satisfaction shortly after customer interaction with the company is completed, for example after delivery. If the customer journey passes through feedback loops that convert negative aspects into positive experiences, the customer is now willing to give a good rating. Now is the right time to actively suggest that he submit a review on a preferred platform.

Correctly Using Knowledge Gained Through NPS

Brand promoters are worth their weight in gold. They are satisfied, passionate advocates of the company and valuable multipliers. With strategic referral marketing, one can take advantage of promoters' beliefs.

Satisfied customers usually recommend a company to:

• Friends, acquaintances, and family
• Existing and past customers
• Users of online networks, forums, and social media
• Their wider environment, for example, neighbors

With the targeted use of special offers and programs – for example, a customer recruiting program – marketers can increase the referral rate. The influence of influencers should not be underestimated!

Detractors should not be written off either. Using the right kind of preventive and reactive measures can ensure winning back dissatisfied customers.

And it can be worth it: keeping an existing customer costs an online retailer an average of five to seven times less money than winning over a new one. The ROI (return on investment) in e-commerce is therefore significantly higher for existing customer loyalty than for new customer acquisition.

If you pay attention to the warning signals transmitted by customers who are leaving, you can react early and prevent the death of the business relationship. Indications of growing dissatisfaction can be a:

• Drop in turnover
• Define in orders
• Decrease in contact frequency

For the planning – and especially prioritization – of concrete measures, it is important for the company to know the value of each customer. The customer lifetime value is a key metric that classifies this figure. It is made up of the sum of the purchases made so far and this customer‘s forecast earnings. The higher this calculated value, the more the investment is worthwhile in increasing the satisfaction and customer loyalty of that customer.