Net Promoter Score – Something Every Sales Leader Should Use

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Net Promoter Score
Photo by Nick B.

Sales leaders have at least one thing in common: The challenge of keeping track of their sales teams’ performance.

Many blogs have been written about sales metrics or sales KPIs offering sales managers advice about which metrics they should be leveraging to address this challenge. In this article, I will cover one of the metrics I have specialized in; the net promoter score.

Firms use KPIs or key performance indicators to track the performance of their business, teams, or people against goals. Blogspot mentions net promoter score or NPS as one of those key sales metrics. You can use NPS to measure how likely it is that your customers will recommend your products or services to somebody else.

This metric is of particular interest as it explains the customer’s perspective rather than merely the sales figures. The salespeople who are competitive might oversell a product and make promises that the product may not fulfill in terms of functionality or features. Of course it can be because of pressure as the salesperson must meet his/her sales quota. Whatever the case may be, NPS can serve as an important metric to assess the customer’s satisfaction with the service or product the firm offers. However, this does not mean that a negative score is solely because of the person who sold or delivered the product. Rather, it could very well be that the product itself is not what the customer expected.

How it works is that you simply ask your customers to give you a rating from 0-10 where 10 means that they are very likely to give you a recommendation and 0, well I think you guessed it. There are three categories that survey participants fall into:

  • Promoters (9-10): This is your best friend and is very likely to be a returning customer and won’t hesitate to refer others to your company.
  • Passives (7-8): This is a satisified but not necessarily a loyal customer. They will likely buy from your competitors if the opportunity is right.
  • Detractors (0-6): This customer doesn’t really like you. Detractors will look elsewhere to do their business in the future and might tell others to avoid doing business with you. People in this category may have a negative impact on your brand.

Sometimes the survey also includes an open-ended question asking the respondent what is the primary reason behind the score given. This question is often a conditional one meaning that it only appears if the customer gives below a certain threshold, such as below 7 (detractor).

So what about the timing and frequency of these surveys? My answer is: it depends. For example, one of my former clients, a car dealer, sent an NPS survey to everyone who did a test drive or bought a car. Some experts might say that if it is a new customer you shouldn’t send out a survey immediately. This opinion might have some truth to it but it really depends on the products or services being offered. The frequency is important because when the dealer sold many cars to one customer, e.g. car rental, it did not want to bombard the customer with multiple surveys. In those cases, the dealer decided only to send one every month. I would recommend sending an NPS survey every three-to-six months to recurring customers. Sending a survey invite less frequently to those types of customers will increase the probability that they will answer your survey, thereby improving your response rate.

You can find out your net promoter score by subtracting the percentage of detractors from the percentage of promoters. I have used Power BI to automatically calculate these scores, associating them with sales teams and salespeople.

If you intend to use NPS for your firm, or if you would like to apply it to other areas of your business, I have written blog posts about how simple it is (or can be) to implement it from a technical perspective. So don’t wait to start leveraging this important metric in order to improve your customer service and sales performance.

Feel free to leave your thoughts and experiences about using and implementing NPS for your organization.

8 COMMENTS

  1. Customers, show me the money! It was a line made famous by actor Cuba Gooding in the movie Jerry McGuire. It is a plea for results, not promises; performance, not intentions. And it reminds me of some of my clients that rely on the Net Promoter Score as their single proof of service excellence.

    Now, don’t get me wrong. I have great admiration for the way the NPS got the C suite focused on customers and service instead of only drilling down on this quarter’s financial balance sheet. But, it unfortunately enticed some leaders, seeking to simplify the customer’s complex relationship with an organization, to rely on a single question to gauge customer affinity. It became the ultimate question, somewhat like, “I promise that someday I will marry you.”

    We all know customers demonstrate their loyalty in a variety of ways. Loyal customers buy again, buy more, trust more, and provide a wider berth for mistakes. Some identify so much with a brand they proudly wear it. Their Bass Pro Shops caps or Harley-Davidson jackets attest to their deep allegiance. The NPS reminds us all that the highest level of customer fidelity is their eagerness to be advocates. But, the NPS does not seek to learn about performance, only intention. It is a good start. The real test of customer advocacy is their actual words of recommendation or their amorous stories that start with phrases like “You’re not going to believe what happened to me.”

    I like Cuba’s line. Promises don’t build trust; performance does. Intentions are not the bottom line, actions are. The politician asks, “Will you vote for me?” and the citizen, excited by the campaign, says “yes.” But, promises made at a political rally are not the ultimate test of political support, only votes cast behind the curtain. Basing evaluations and scorekeeping on how many customers promise to come back to your store is foolhardy when the real metric that matters is how many cross your threshold again.

    We were working with a major bank in Central America. They had for years used as their key metric in the customer service arena, a survey question giving customers a change to register their “overall customer satisfaction.” Their belief was that if customers were satisfied—meaning their needs and expectations were met—they were very likely to be loyal. They were happy 80% of their customers indicated they were satisfied with their experience and the bank worked to get that percentage higher. Yet, the stark reality is that about 75% of customers who leave an organization to go with a competitor report they were satisfied with the one they abandoned. Satisfaction is not worth much.

    They then switched to a Net Promoter Score as their new metric was a survey question that sought to learn how many customers indicated they were promoters—meaning they would recommend the bank to a friend or colleague. And, they were thrilled that about 80% of their customers were classified as “promoters” and the bank worked to get that percentage even higher.

    That is when we came on the scene. We started a conversation about the demonstration of loyalty—a “show me the money” discussion. Do you want to improve satisfaction or do you want to improve the bottom line? Do you want intent to recommend or do you want customers to actually recommend you? When we encouraged them to add a question: Have you recommended our bank to a friend or colleague, the 80% dropped to less than 55%. It was an eye opener on what really matters—performance, not intention.

    Seeking a cause and effect metric is tough in the qualitative world of customer experience. There is so much subjective, eye-of-the-beholder built into the assessment. There are so many variables that make up the anatomy of affection it is challenging to sort out what actual caused what. So, we reach for correlation measures coupled with a lot of hope. We hope that if they say they would recommend us, they actually do. We hope that if they say they found their experience “wonderful” (or the “researchy” phrase—completely satisfied), they will demonstrate that evaluation by positively impacting our bottom line. And, what do we do about the 25% of customers who would never register their likelihood of recommending no matter how ecstatic they were about their truly awesome experience?

    In the end, no single metric can effectively capture what we need to know to have high level of confidence that customers will “show you the money.” Lifetime value, share of wallet, degree of effort, recency, retention, spend per transaction are all useful in ascertaining how customers evaluate the experiences and translate it into performance that matters to the success of the enterprise. Like, love, customer devotion will fortunately retain a bit of mystery hopefully leading us to never take it for granted.

  2. I agree that NPS is an easy KPI for sales staff, but NPS is unfortunately often misunderstood. In the effort to have a score for KPIs, many forget that customers attach their own interpretation to what you ask them. Managing the VOC for a client in the motor industry too, we found that customers ascribe different meanings to WHAT they will recommend… which could be the service received, the sale person, the brand or process (efficient) etc.
    Also, one has to consider the difference between intentional and behavioural recommendation (advocacy). We ask if they have recommended the dealership since the interaction, to get a sense of their advocacy. The danger is relying on the score only, without understanding what it tells you.

  3. Yes, the NetPromoterScore is a nice way to interact with customers. On the long run it could make sense to extend it to a NetPromoter-Lab, with periodical A/B-questions to signal customers, that their wish is our command. Relation matters. Nice Blogpost Illugi, thx for sharing your thoughts
    Helmut

  4. I agree with Chip. NPS is only part of the equation and can be quite misleading. A “gear box” if you will, incorporating other questions, is more impactful. If you’re using it to grade sales people, you may want to focus on behaviors that can be coached as well. When we do this in the banking industry, we get dramatically higher performance. But the questions must be aligned with the strategy and desired culture. Thank you for the post, Illugi.

  5. Although surveys are a wonderful tool, it only help if they are responded, replied and analyzed. it happen in my personal experience as customer, that I do not like to answer surveys, so for me as small business, it causes a huge problem to get surveys replied back, so my NPS is so easy, my loyal clients are the only ones that reply.

  6. Thanks for all of your great replies. Unfortunately I can’t reply directly to individual responses so I put all of them in this one comment.

    I agree with Stephen and Chip that it’s results that affect the bottom line, not promises. I think everyone can agree that referrals are important for any company’s success. Also, as Liezel points out, I don’t think NPS was intended to be an objective metric because it is by nature a very subjective question. It asks how likely someone will do something but not if the person has actually done it. Asking someone if he or she will do something in the future is of course no guarantee that they actually perform that action. I ask my daughters if they will clean their room today and by the end of the day their rooms have not yet been tidied. I think follow up and nurture of those clients who land in the promoter rank will help to improve the bottom line and their loyalty moving forward. Just like Ima states, the loyal customers are those who end up answering the surveys. In line with Helmuts input. I think by simply showing that the firm cares about its customers’ experience says a lot about the firm’s service culture and identity.

    Stephan, you raised some interesting topics about coaching. What do you been by behaviors that can be coached? Do you ask customers about the behavior of the bank’s employees? I also agree with you about considering the context before defining the questions asked to customers as different questions apply to different types of businesses.

  7. hi Illugi, great points as well in your response. As far as the coaching, etc., yes we ask the customers about the employee behaviors after interactions. The timeline, frequency of the survey and the specific question wording are critical. Then mapping the behaviors to the KPIs becomes the proof in the pudding, so to speak. Happy to have a conversation some time. I worked for large research firms for 20 years, but something was always missing.

  8. Thanks for your response Stephen. Interesting approach indeed. Yes, I would be interested to learn more about your discoveries in the KPI space and how you connect it with behavioral science. You can find my LinkedIn handle on my profile on CustomerThink.

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