Will Trevor is the Faculty Program Director for Marketing at Excelsior College. The original post can be viewed on LinkedIn.
happy_sad_face_smiley by Alan O’Rourke: https://flic.kr/p/ovkdiu
A few years ago my wife and I visited an historic home in the UK, which was run by a wonderful organization that preserves old buildings for posterity, called the National Trust. On arrival in the car park we were greeted by an eager volunteer who thrust a large document into our hands and asked us whether we would fill in a customer satisfaction survey. On opening it, we realized that the survey ran to about ten pages, with multiple questions per page. And while we were broadly supportive of the organization and its aims, we weren’t willing to invest the time required to complete an overly-long questionnaire. Depositing it in the nearest trash can, we noticed a pile of the same forms, which suggested other visitors were similarly disinclined. Those incomplete forms represented a loss of feedback and data to the organization that could otherwise have been put to better use.
In years gone by organizations traditionally asked a wide range of questions to try and gauge that elusive concept of ‘customer satisfaction’ – these surveys, such as those from the National Trust, often provided few actual insights to guide the manager. More recently, however, we have seen the growing use of the Net Promoter Score (NPS) by companies such as Apple, Nordstrom, and Samsung, to name but a few. This article is going to look at NPS and how a single question has helped revolutionize the measurement of customer satisfaction.
Customer satisfaction is a priority for many organizations, but problems arise in accurately recording and measuring it: what exactly does it mean to be satisfied? You may have enjoyed the product, but you never buy it again, you may have appreciated the service, yet never return. Traditionally customer satisfaction surveys ranged across a number of areas – from how ‘happy’ you were, to how well you thought you were treated. Though not entirely without relevance, such surveys were often cumbersome and wordy and generated little that was helpful in identifying and measuring satisfaction.
Satisfaction: the Problem of Definition
Largely the problem was one of definition and the very subjective nature of what the concept means to any one person – what you call satisfaction may differ greatly from what satisfies me. This was what lay at the heart of the problem: rather than trying to identify an objective definition of satisfaction, what was more important was to focus upon an outcome that arose from that satisfaction and measure that instead.
The Arrival of the Net Promoter Score
This is where the Net Promoter Score (NPS) came in. It emerged from some research by author and business strategist, Frederick Reichheld, of Bain & Company, and it first saw the light of day in a 2003 Harvard Business Review article entitled, “One Number You Need to Grow“. Reichheld argues that, when discussing customer satisfaction, there is only one customer question that really matters:
How likely is it that you will recommend this product or service to a friend or colleague?
Rather than wrestle with what satisfaction meant, instead we can see the result of satisfaction in a willingness to recommend, based upon how well the individual felt they were treated and how this added to their overall experience.
How Does NPS Work?
A typical NPS survey will ask the customer to rate the likelihood that they will recommend the product or service on a scale from 0 to 10. The marketer then differentiates between the promoters, who are those giving a mark of 9 or 10, and the detractors, marking between 1 and 6. The net scores comes from subtracting the aggregate score of the detractors, from that of the promoters and then deriving a percentage. Those respondents who grade a 7 or 8 are discounted from the calculation and considered to be ‘passively satisfied’.
What Does the NPS Score Mean?
Many companies may typically generate NPS scores between 10% and 30%, but more world-class companies often strive to deliver scores in excess of the 50% mark. NPS has been gaining popularity in recent years and many top businesses have focused upon this as one of their key customer service metric. Notable among the top performers in 2015, at least from the perspective of NPS, are:
- Don’s Mobile Glass + 89.1
- Samsung + 67
- Netflix + 52
- Apple + 41
But some brands are not always showing high positive scores and some are even in negative territory. Examples of these include:
- Disney TV – 17
- Discovery Channel – 17
- Amazon Prime – 11
Reichheld’s approach had been influenced by what he had seen happening at Enterprise Rent-A-Car, who had cut the number of questions in their customer satisfaction survey from 18, down to 2. Enterprise found a correlation between those recommending the service and repeat business from customers returning to rent. In addition, the feedback from the detractors also enabled the company to more clearly focus on what needed to be done to make improvements to their customer service. It was this link between customer satisfaction and increased sales that led Reichheld to conclude that the NPS measure could be directly linked to increased growth.
Does it Have any Critics?
Yes, quite a few. Criticism of NPS mainly comes from those who suggest that the mathematical correlation between a high NPS score and growth is not fully proven. Although this is something that Reichheld acknowledges and instead he insists that the objective is to make NPS workable for practitioners, rather than to aim for academic exactitude. Other critics have suggested that the likelihood to recommend doesn’t perform any better than other questions, such as those eliciting responses relating to ‘satisfaction’ or ‘liking’.
Overall, NPS has been gaining in popularity in recent years, but the acid test for the relevance of a marketing concept is always how much practitioners embrace it and use it in the field. Many leading world-class businesses, such as Apple, American Express, and Intuit, focus on NPS as one of their leading metrics and consider it as relevance to their operations. It is interesting to see, therefore, how a single question has managed to deliver a revolution in customer satisfaction that has allowed many companies to more effectively improve their customer service.
And as the saying goes,
what gets measured, gets managed
Will Trevor is Faculty Program Director for Marketing at Excelsior College
happy_sad_face_smiley by Alan O’Rourke: https://flic.kr/p/ovkdiu
Opinions expressed are solely my own and do not represent the views or opinions of my employer.