NPS means both Net Promoter Score and Net Promoter System. You may know about net promoter scores for customer loyalty, but do you understand how the net promoter system can change your business?
The net promoter system is leading the way in transforming how businesses evaluate and improve their connections with customers. Companies using Net Promoter commit to specific processes and systems that help everyone concentrate on gaining the strong loyalty of both customers and employees.
In this blog on the net promoter system, we’ll explore its history, components, and the important steps to make it work well in your organization.
What is the Net Promoter System?
The Net Promoter System (NPS) is a way of managing businesses and tracking how much customers like them. Fred Reichheld, Bain & Company, and Satmetrix created this system.
Companies typically ask a few key questions in their surveys:
- On a scale of 0 to 10, how likely are you to recommend [product, service, or company/brand] to a friend or colleague?
- Why do you feel that way?
- How can we improve?
Analyzing the responses, you can calculate the Net Promoter Score (NPS). This NPS score provides insights into customer satisfaction.
Analyzing the NPS by business, region, or other segments helps track loyalty-building efforts over time. Essentially, it functions as both a customer balance sheet and a moral guide for evaluating the company’s performance to serve customers.
History of the Net Promoter System
The Net Promoter System (NPS) was introduced in the early 2000s by Fred Reichheld, a business strategist. He wanted to find an easy way to measure customer loyalty and predict business revenue growth.
Traditional methods for measuring customer satisfaction were complicated and didn’t clearly show how a company would grow. So, Reichheld suggested a simple survey question to customers: “On a scale of 0 to 10, how likely are you to recommend our company/product/service to a friend or colleague?”
Based on the responses to this question, customers were categorized into three groups:
- Promoters: Happy customers with a rating of 9 or 10, highly satisfied and loyal. They may recommend your company to others.
- Passives: Okay customers, giving a rating of 7 or 8. Content with your service but open to trying competitors. They don’t actively promote your brand or provide negative reviews.
- Detractors: Unhappy customers with a rating below 6, dissatisfied with your service. They share negative experiences that can harm your company’s reputation and deter others from using your service.
To find the Net Promoter Score, the percentage of Detractors was subtracted from the percentage of Promoters.
Many businesses now use this system because it’s simple and based on the idea that if a customer is willing to recommend a company, it shows they are satisfied and loyal. Over time, the net promoter system has changed, and companies have added follow-up questions and feedback loops to understand better what customers think.
Nowadays, net promoter score is more than just a number – it’s a whole system that focuses on customer feedback, always getting better and ensuring customer satisfaction is aligned with business growth.
Components of Net Promoter System
The Net Promoter System is a complete framework that goes beyond just asking a survey question. It includes important parts that work together to improve the customer experience. Now, let’s look at the main parts of the system:
01. Simple and Powerful NPS Survey Question
The NPS survey question is simple but helps you understand customer sentiments. It’s like the beginning of a customer journey to explore more about your customer’s thoughts. It also helps companies know when and how to learn more from them.
02. Strong Leadership Across the Organization
Successfully using the net promoter system depends on strong leadership that is dedicated to putting customers first. Leaders need to do more than just talk about improving the customer experience; they should also take real steps to make it happen.
Creating a customer-focused culture means making customer and employee loyalty a top priority. It involves choosing skilled leaders and encouraging teamwork between different parts of the organization.
03. NPS as a Trusted Metric
Putting customers first works best when you use a handy tool like NPS. The net promoter score is a simple way for employees to grasp and boost customer loyalty.
Top-notch companies use NPS to figure out how loyal their customers are at different points of contact, giving them insights into where they stand in the industry. Customer and employee net promoter scores give important data to understand the value of different customer groups, which helps in making smart decisions.
04. Thorough Feedback Loop
The net promoter system has three important steps to gather and use customer feedback:
- Inner Loop: This step quickly shares customer feedback with frontline employees, which helps them improve immediately.
- Huddle: Teams come together in interactive sessions to work on and solve customer issues, which strengthens their dedication to customer loyalty.
- Outer Loop: This phase involves making decisions that go beyond the frontline. You can use insights from the feedback loop to analyze the root causes of issues.
05. Strong Systems for Quick Feedback.
The net promoter system relies on fast-cycle closed-loop feedback. To make this work, there needs to be a solid system in place. This system should be able to ask for feedback, collect the responses, send them to the right workers right away, keep track of what happens next, and help find useful information from the data.
Benefits of Net Promoter System
The net promoter system offers several benefits to organizations that implement it as a customer experience management tool. Some of the key benefits include:
1. Trusted and Easy to Get Everyone on Board
Net Promoter System (NPS) is a reliable way to measure customer satisfaction. It’s not something new; many successful companies already use it. People, including your managers and those who control the budget, understand and trust it. This makes it easier for everyone to agree to use NPS to make things better.
2. Makes Your Business More Money
NPS is not just about whether customers are happy; it predicts if they’ll keep coming back. This means more money for your business in the long run. Company leaders often like net promoter score because it is directly linked to keeping customers happy and making more money.
3. Helps You See the Big Picture and Small Details
NPS can be like a zoom lens on a camera. You can use it to look at how much customers like your whole business or focus on specific things like products or services. For example, if you work at a hotel chain, you can see how each hotel is doing. This helps you figure out what’s working well and what needs improvement.
4. Simple, Fast, and Cost-Effective Measurement
Net promoter score surveys are really easy. They ask customers one simple question, so it doesn’t take much time for them to answer. This simplicity also means you can get results quickly. And because it’s not expensive to do, you can keep using it over time without breaking the bank.
5. Helps You Understand Customers Better
NPS surveys not only tell you if a customer likes your business but also let you ask more questions to understand why. This is like getting to know your customers better. Knowing why they like or dislike something helps you make changes to make them even happier.
6. Lets You Compare Yourself and Get Better
NPS is like a report card for your business, but it’s your own special report card. You can compare how you’re doing over time and also see how you stack up against other companies. It’s like trying to be the best in your class. Some companies even share their scores online for everyone to see.
How to Build Your Net Promoter System?
The net promoter system is about figuring out why customers give a certain score, then fixing those issues and improving the overall customer experience and business. Building such a system includes several necessary steps to measure and boost customer loyalty. Here are some easy steps to assist you in setting up your NPS:
Step 1: Start with the NPS Question
Start by asking customers the fundamental net promoter score question: “On a scale of 0 to 10, how likely are you to recommend our company (products or services) to your family or friends?”. This question serves as the cornerstone of the NPS methodology.
Don’t just look at the number score. Ask more questions to understand why they gave that rating. Ask probing questions like:
- What influenced your rating?
- Are there specific aspects you liked or disliked?
- How can we improve your experience with us?
Step 2: Categorize Customer Responses and Calculate NPS
After collecting responses to the NPS question, categorize customers into three distinct groups:
- Promoters: Scores 9 to 10
- Passives: Scores 7 to 8
- Detractors: Scores 0 to 6
Calculate your Net Promoter Score by subtracting the Detractors’ percentage from the Promoters’ percentage. The result provides a numerical representation of customer loyalty and satisfaction.
NPS = % Promoters – % Detractors
Look deeper into each category by considering things like demographics, buying history, or interactions with specific products. This gives detailed insights into your customer base.
Step 3: Analyze NPS Data
Review your company’s NPS scores compared to others in your industry. Examine scores based on location to identify regional patterns and adapt your strategies accordingly. Assess various customer segments, such as new and long-term customers, to discover areas for enhancement.
Evaluate different channels, like online and in-store, to identify those performing well and those that may require improvement.
If your business is always changing, check NPS every week to see quick changes and act fast. But if your business is more steady, checking NPS monthly should be enough to spot trends and make smart changes.
Step 4: Close the Feedback Loop
Understand that the scores you collect are helpful, but it’s really important to have detailed feedback to improve. Share what customers are saying with the teams responsible for customer experience, such as CX, product design, IT, sales, and pricing.
Make changes based on feedback to tackle customer issues and improve satisfaction. Show your commitment to improvement by informing customers about your steps in response to their feedback.
For those existing customers who are promoters, find out what they liked the most about it. Knowing what makes them happy helps you make those things even better and create strategies that have worked well in the past.
Step 5: Foster Employee Engagement for Customer Centricity
Recognize that employees are really important to the Net Promoter System for giving customers great experiences. Make sure everyone in the company is part of creating a customer-focused culture.
Encourage and inspire employees by showing how their work leads to happy customers and boosts their excitement for making memorable interactions. Emphasize the joy of building customer loyalty and promote a lively and creative workplace atmosphere.
Create training programs to make sure all employees know how important it is to focus on customers. Use stories and examples of happy customers to show the value of great customer service.
How QuestionPro CX can Help in Developing the Net Promoter System (NPS)?
QuestionPro CX is a comprehensive customer experience management platform designed to help businesses measure, analyze, and enhance customer satisfaction and loyalty. It has different tools to collect customer feedback, find ways to improve things, and help the business grow.
QuestionPro is essential for making the Net Promoter System (NPS) better. It offers a complete platform to measure, analyze, and improve customer engagement and loyalty. Let’s see how QuestionPro helps in developing the NPS:
- User-Friendly NPS Survey Design: Creating NPS surveys is simple with QuestionPro’s user-friendly interface. You can easily design the NPS question and add more questions to understand customers’ feelings better.
- Multi-Channel Survey Distribution: QuestionPro supports different ways to send out surveys, like email, web, and social media. This flexibility will help your business reach customers through the most effective channels, which improves response rates.
- Customizable Survey Templates: QuestionPro provides customizable survey templates, including pre-made NPS ones. This speeds up the survey creation process, which lets your businesses launch NPS initiatives quickly.
- Real-Time Data Collection and Analysis: The platform collects and analyzes data in real-time, letting businesses monitor NPS results as they happen. This quick feedback will allow you to make fast decisions and find improvement areas.
- Segmentation and Comparison: QuestionPro lets businesses organize NPS responses by factors like demographics or geography. Comparative analysis tools will help you compare NPS against industry standards or competitors.
- Closed-Loop Feedback: QuestionPro supports the crucial step of closing the feedback loop. It allows you to seamlessly communicate customer feedback to relevant internal teams and take prompt action. This closed-loop feedback system ensures that customers see tangible improvements based on their feedback.
- Automated Reporting and Dashboards: The platform offers automated reporting and customizable dashboards that display NPS data visually. This makes it easy to interpret and share NPS insights within the organization.
QuestionPro makes creating Net Promoter Score (NPS) surveys easy and provides tools to understand the data better. Feel free to book a demo of this feature on our QuestionPro CX platform.