CX Metrics Series: Net Promoter Score

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iPerceptions_Blog-Post_NPS_Use-Case_Dec-2017.jpgThis is the fifth blog post in a series that examines key Customer Experience metrics that every Voice of the Customer (VoC) program should measure to better understand the visitors’ digital experience. In this post, we look at a key CX metric that gauges visitors’ likelihood to recommend your brand to friends and colleagues: Net Promoter Score®.

Word-of-mouth can make or break a company. It can be one of the most powerful drivers of success, but it can also be the weight that sinks it.  

One of the most talked-about aspects of any business is its website. Naturally, a great website experience can sometimes spur people to recommend your company to friends, family members and colleagues, but visitors can often be more willing to broadcast negative experiences when they occur.

But how do you measure a customer’s loyalty to a certain company, and the likelihood of their website visitors recommending the company to other people? Net Promoter Score®, or NPS® for short, helps to shine a light on your visitors’ intentions, and can only be collected by directly asking your visitors for their feedback.  

In this blog post, I look at how the NPS metric is measured, its benefits to your organization (and some criticisms to be aware of), as well as a use case showing how it can be a valuable Customer Experience (CX) metric to have at your disposal. 

 

How to Measure and Calculate Net Promoter Score (NPS)

NPS was introduced by Frederick F. Reichheld in a 2003 article for the Harvard Business Review titled “The One Number You Need To Grow”. In this article, Reichheld lays out the approach that has since been utilized by countless organizations to measure their customers’ likelihood to recommend their company. 

First, after conducting tests using a series of different phrasings, Reichheld and his colleagues found that the following phrasing outperformed all others they tested in terms of predicting repeat purchases and recommendations to friends and peers, regardless of industry: 

 

“How likely is it that you would recommend [company X] to a friend or colleague?”

 

While this is the standard phrasing for calculating NPS, some may choose to personalize the tail end of this question (e.g. replacing “to a friend or colleague” with “to a friend”).   

In terms of the scale for this question, Reichheld selected a scale that would be very simple to avoid confusion among respondents, and so chose a 0-to-10 scale that uses “Not at all likely” and “Extremely likely” as descriptors for both ends of the scale, respectively.

In the context of the website experience, we like to measure the impact of the website experience on visitors’ likelihood to recommend the website to their peers. In this scenario, here is how we recommend asking this question, based on the guidelines mentioned above:

NPS Question Website Experience Example

To measure your company’s NPS, first group your respondents into the following clusters based on the rating they provided: 

Clusters Ratings
Promoters 9 – 10
Passives 7 – 8
Detractors 0 – 6

 
Then, use this formula to measure your NPS, which will give you a score between -100 and 100: 

NPS = % of Promoters – % of Detractors

For example, if 10 percent of your customers are ‘Detractors’ and 40 percent are ‘Promoters’, you have a Net Promoter Score of 30. Having a positive NPS means that you have more Promoters than you do Detractors. As such, the higher your NPS, the better. 

Why you should measure Net Promoter Score

There are many benefits to measuring NPS, especially when collected and leveraged as a high-level CX metric:

1. It’s an easy to question to ask and to communicate internally

Since it uses a single straightforward question and scale, companies can easily measure NPS using any medium through which you communicate with your customers, whether it’s by phone, e-mail or Web, and communicate findings internally to key stakeholders.

2. You should always monitor your company’s “recommendability”

As individuals, we’re always curious about what people say about us to other people. A company is no different, especially since customer loyalty can have a significant impact on the bottom line. NPS provides a way for you to measure the impact of your website experience on your visitors’ likelihood to recommend you to their peers. 

3. Likelihood to recommend can only be measured with customer feedback

Once visitors leave your website, you can’t track what they’ll do next. The only way to truly know the likelihood that your visitors will recommend you after their visit, or dissuade other people from trying your offerings, is by collecting customer feedback.

4. It has become a mainstream metric to measure 

Since its introduction, NPS has been adopted by thousands of companies in different industries, and the number keeps growing. Simply put, it’s likely that your executives and managers are now expecting to be updated on the company’s NPS on a regular basis.  

5. It provides a springboard to understand what drives your customers to recommend you

Similar to other key CX metrics like Customer Satisfaction and Task Completion, NPS is a metric that can encompass a visitor’s entire website experience, and can be influenced by several factors. By first identifying your Promoters and Detractors, you can then dig deeper into their feedback, or even cross-reference their feedback with web analytics or session replay, to better determine the aspects of their experiences that drove them to become a Promoter or Detractor. 

Criticisms of Net Promoter Score

Before looking at a use case showing how you can leverage NPS in your organization, it’s important to note that NPS is not without its critics. Some of the most widespread criticisms surrounding NPS include:

1. Its simplicity may be insufficient to gauge something as complex and long-term as customer loyalty

Bob Hayes, PhD, points out that customer loyalty is multidimensional, and can be comprised of a customer’s likelihood to do each of the following:

  • Stick with the same provider / vendor (Retention Loyalty)
  • Purchase more items from a company in the future (Purchasing Loyalty)
  • Recommend to another person (Advocacy Loyalty)

Hayes argues that NPS only deals with the Advocacy dimension but doesn’t consider the other key dimensions of customer loyalty.

2. More of a relationship-level metric than transactional-level metric

Many companies use NPS to gauge how customers feel about a single interaction with the company (“transactional-level”). However, as explained by Bruce Temkin, founder of the Temkin Group, NPS is more ideal as a “relationship-level” metric, and finds that companies who use it as such see more success in driving positive change internally than those who use it at the transactional-level.

Use Case: The website attributes that drive website visitors to recommend

Knowing which of your visitors are Promoters, Passives and Detractors is great. Knowing what aspects of their website experience made them that way is even more valuable. 

These insights can be found by asking your visitors to answer a survey that includes both the Net Promoter Score question and questions about specific aspects of your website.

For this use case, let’s look at a fictional ecommerce company that primarily sells large-ticket items, and have seen their Net Promoter Score take a tumble in recent months. To get to the bottom of this decrease, they first use text analytics to dig through their respondents’ unstructured feedback to see if any website attributes stand out. Based on their analysis, they modify their survey to ask their visitors to rate their satisfaction with specific attributes that touch on the website’s navigation, content and interactivity. 

Here are the results of these attribute questions:

Based on today’s visit, how would you rate our website as one that:

Website
Dimension
Attribute
Name
Attribute 
Question
Rating
(Mean)
Navigation Ease of Use is easy for you to navigate? 6.7
Navigation Discovery enables you to find what you are looking for? 6.4
Content Clarity presents the information clearly? 6.7
Content Multimedia has enough visuals (photos & videos)? 6.1
Interactivity Self Service provides you with the tools and features that enable you to help yourself? 7.2
Interactivity Contacts enables you to identify and contact the right person? 6.3

Compared to the other attributes examined, the company’s website performs well in terms of its “Self Service” aspects, while its multimedia content leaves something to be desired. 

But which of these attributes actually had an impact on their visitors’ likelihood to recommend the website to a friend or colleague? 

To answer this question, a multiple regression analysis is performed to measure the impact that each individual website attribute has on a visitor’s likelihood to recommend the website to their friends or colleagues. This analysis not only identifies the variables with a statistically significant impact on the visitor’s NPS score, but also how each website attribute compares in terms of its impact. 

The multiple regression analysis finds the following attributes to have a statistically significant impact on NPS, which are categorized into quadrants to highlight where the company should focus its efforts:

Website Attributes Impact on NPS Example

A few insights that the ecommerce company can take from this chart: 

Findings Analysis
Discovery” and “Ease of Use” both had low ratings but had the highest impact on NPS. Due to their high impact on NPS and underperforming ratings, the website’s navigation is among the main culprits for the decreasing NPS score. 
Self Service” had both the highest rating and a large impact on NPS. This is an ideal position for any website attribute to be. It is unlikely to be contributing to the company’s tumbling NPS.
Clarity” and “Contacts” both had low ratings, but comparatively low impact on NPS. The company should monitor their visitors’ experience with these items, although improving these items could still be worthwhile.
Multimedia” did not have a statistically significant impact on NPS. Despite having the lowest rating of all the website attributes examined, the ability to actually reach this content was more crucial for these visitors.

Based on these findings, the ecommerce company can decide to dig further into the navigational aspects of their website, which includes modifying their research to collect more in-depth customer feedback and insights from their visitors regarding the website navigation.

This can then allow the company to better determine how to best streamline their website experience and boost the likelihood that their visitors will recommend the company and its website to their peers. 

Final thoughts

Word-of-mouth can be your best or worst friend. In his book, Wind In Your Sails, entrepreneur David J. Greer points out that:  

“A customer talking about their experience with you is worth ten times that which you write or say about yourself.”

By collecting the Net Promoter Score, you can gain a sense of your website’s impact on what Reichheld refers to in his article the Harvard Business Review as “the ultimate act of loyalty” – recommending your organization to their peers. 

With its short-term and long-term implications to your organization’s bottom line, NPS can be a useful CX metric to measure across your organization using a Voice of the Customer (VoC) program.

Resources to check out

If you would like to learn more about Net Promoter Score, here are some resources to which I refer in this blog post that provides more information about this CX metric: 


Did you like this post? Make sure to check out these other posts in our ongoing Customer Experience Metrics Series.

 


Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld

Banner image source: Matthew Henry on Unsplash

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