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The Net Promoter Score ® or NPS®, is a management tool, a metric to measure customers loyalty/satisfaction with a company. It measures their experiences with the company, their perception of the brand.
At Intraway we measure NPS in two stages. First, within the customer ATP (acceptance test protocol), while we test our products in the customer’s mock-up environment. The second measurement is at the end of projects; once no tasks are pending. This way we measure two types of perceptions. The first one is related to the technical functions. The last one is a complete perception of the project and business itself.
Do you know what a Balanced Scorecard is? Learn about this real-time strategy performance management tool on our blog: Balanced Score Card: What is it for?
In 2003, Harvard presented NPS. Since then, a lot of companies have taken it as part of their metrics. It’s used in different industries such as air transportation, retail, industrial goods & services, consumer products, financial services, healthcare, media, and Telecommunications.
Nowadays when you go to buy cloth, have dinner, or even when talking with a call center, you may get an e-mail asking if you would recommend their company. With that information, they can measure their NPS®.
The issue when receiving this kind of emails or text messages is that it has to be explained the reasons why they are asking. The rate and what each figure represents needs to be clear. Otherwise, people won’t understand their grade and the measure won’t represent the real scenario. So, we need to know how to calculate NPS®.
Calculating the Net Promoter Score
The core question is: “How likely is that you recommend our organization to a friend or colleague?” Rates can go from 0 to 10. Within this figures, we will have “detractors”, “neutrals or passives” and “promoters”. If the answer is between 0 and 6, its counted as a “detractor”, 7 and 8 are “neutrals”, and 9 & 10 are “promoters”.
Then, to get the global NPS, you should calculate as follows:
TIP!! If you have a lot of surveys and get a bit confused with the formula, you can use NPS online calculator.
Why do we care about NPS?
As Fred Reichheld & Rob Markey highlighted in their book “The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World” in 2011, the “promoters” have value-creating behaviors. So, who might recommend us to other potential customers, is more likely to remain as customers for a long time and buy a different set of products. We have to be aware that it’s crucial to keep our “promoters” happy to succeed in the future.
It takes a lot of time and effort to get a customer’s loyalty, usually years. But you can lose it within minutes, or even an inadequate response to an e-mail. Imagine, during a maintenance window, subscribers of one of our customers lose internet service for 1 hour. This would not be taken as an “Amazing Delivery” by our customer, so we shouldn’t expect a perfect grade here. We have an opportunity to improve.
What about detractors? These might be customers that are not satisfied with our products or services. But it can also include people with whom he or she interacts.
The goal is to understand how can we improve and learn from our mistakes. To understand what’s relevant to each of our customers, and to take actions according to their feedback. That’s why it is so important not only to ask “detractors” or “neutral” about their rates, but also to “promoters”, to see in what we are good in and keep on with that.
Our customer’s feedback is essential to improve our playbook of products and our relationship with them. Take all their answers as constructive feedback for future projects.
With all this information, I’m sure that you’ll think twice before you rate the next survey you get asked if you would recommend one organization to a friend or colleague.