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Net Promoter Score® –
A Brief Introduction
We talk to lots of people about Net Promoter Score and
there are many mis-conceptions about it. So we put
together this brief introduction to answer the questions
we hear most often.
Do you have a question that’s not here? Let us know on
info@genroe.com.au and well provide you an answer.
© Genroe (Australia) Pty Ltd. All Rights Reserved
Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld
Contact Us At
www.genroe.com
info@genroe.com.au
Australia
L39 Citigroup Centre, 2 Park St, Sydney
T +61 2 9191 4700
Agenda
• What is it?
• Where did it come from?
• What’s wrong with using Customer Satisfaction?
• Why is it such a big deal?
• So who uses it?
• How can you use it?
• How do you calculate it?
• What is a good score?
• Some additional FAQs
2
What is it?
3
On a scale 0-10, how likely is it that you would recommend
our company to a friend or colleague?"
0 1 2 3 4 5 6 7 8 9 10
Detractors Promoters
Net Promoter Score = % of Promoters - % of Detractors
OR said another way
Net Promoter Score = # Promoters - # Detractors
Total Responders Total Responders
Put simply, the Net
Promoter Score is the
result achieved when you
survey your customers
with the “would you
recommend” question.
Subtract the percentage
of 0s to 6s from the
percentage of 9s and 10s
and that gives you the
NPS.
Neutral
Where did it come from?
4
The research that
originally identified the
Net Promoter Score was
performed by Frederick
Reichheld from Bain in
concert with a company
called Satmetrix.
The results of the
research were first
broadly published in a
Harvard Business Review
Article in December
2003.
Since that time
numerous books (some
by Reichheld) have been
published to expand on
the concept of Net
Promoter Score and help
organisations implement
programs to measure
and improve their
scores.
Source: “The One Number You Need to Grow, Harvard Business Review 2003, Frederick Feichheld
What’s wrong with using Customer Satisfaction?
5
There is nothing wrong
with Customer
Satisfaction as a
measure.
It’s just that the
research that was done
into Net Promoter Score
showed that Customer
Satisfaction is often not
the best indication of
customer loyalty.
The trouble is that plenty
of satisfied customers
defect from businesses
every day.
So, if customer loyalty is
the goal, Customer
Satisfaction just isn’t
that useful.
On the other hand, the
goal of the NPS research
was to find a measure
that captured future
customer loyalty and
therefore profitability.
This chart illustrates the frequency with which each of the
different loyalty questions emerged as the top correlate to
actual customer behaviour when testing these links across
six different industries.
Source: “The Power Behind a Single Number”, Satmetrix
Vs
Why is it such a big deal?
6
The primary reasons that
NPS has become so
popular are that it is:
• Simple to understand
and calculate
• Not a complex
combination of
multiple metrics with
different weightings;
• A leading indicator
• It predicts future
outcomes; and
• Correlated to business
growth
All these points are
important but the last is
critical. NPS is one of
very few (if any)
measures that have been
shown to correlate to
business growth.
Put simply if you
increase NPS you will
more than likely increase
revenue.
Four research examples of the correlation between Net
Promoter Score and income growth. All showing a solid link.
Sources: “The One Number You Need to Grow, Harvard Business Review 2003, Frederick Reichheld
“The Power Behind a Single Number”, Satmetrix
“Advocacy Drives Growth”, London School Economics, December 2005
Bain & Company Experience
Okay, but does it work? Yes – Business to Business
B2B companies
adopting the Net
Promoter discipline,
successful companies
saw an average of
23% increased
revenue growth.”
Sources: “Answering the Ultimate Question: How Net Promoter can Transform your Business”, Brooks, Lara, 2009
Satmetrix, Improving Net Promoter Scores in Business to Business Relationships Net Promoter Conference 2009
Forrester via Satmetrix, “Building the Foundation for an Action Oriented Net Promoter Programme” Net Promoter Conference, June 2010
BeyondPhilosophy, Forrester via http://www.slideshare.net/BeyondPhilosophy/customers-are-irrational-stop-fighting-it
Business Telco provider
used NPS process to
increase orders by
150%
IT Product Supplier
used NPS process and
identified new
opportunities in 39% of
follow-up meetings
Global B2B achieved
100%+ increase in
loyalty, double digit
growth in mature
market
Global Facilities
company has improved
retention rates by 46%,
using NPS process
For more case studies see this post:
Net Promoter Score Success Stories and Case Studies
Okay, but does it work? Yes – Business to Consumer
Global Communications
business increased
sales by 13% in a
single digit growth
industry. [2].”
Sources: “eBay – Making it Work – What Your Data is Really Telling You”, 2009
Forrester via Satmetrix, “Building the Foundation for an Action Oriented Net Promoter Programme” Net Promoter Conference, June 2010
A&E Television Networks – Boosting Return on Ad Spend and Consumer Engagement with Advanced Net Promoter Segmentation.” 2008
ResponseTek, “Major Telecom Company Increases NPS® by 25% in 100 Days” RT Case Study TopTelcom 062810, 2010
http://management.fortune.cnn.com/2012/04/19/american-express-customer-service/
nib health funds: Checking Up On Customer Loyalty.
Major Telecom
company: 25 point
increase in NPS which
lead to a 3% reduction
in early life churn and
5% increase in first call
resolution.
eBay found average
revenue is consistently
higher for Promoters
than Detractors, across
their 6 top markets.
Amex says: “…a
promoter … [gives]
10% to 15% increase in
spending and four to
five times increased
retention”
nib health funds found
the risk of attrition for
Detractors is 1.5 times
Promoters.
A&E Television found
that NPS and Ratings
are correlated for
Television shows: Low
NPS drives Low Ratings,
High NPS drives High
ratings.
For more case studies see this post:
Net Promoter Score Success Stories and Case Studies
So who uses it?
9
Many global and
domestic companies use
Net Promoter Score in
their business including:
• General Electric
• Honeywell
• Procter and Gamble
• Allianz
• American Express
• BearingPoint
• Intuit
• Verizon Wireless
Source: http://en.wikipedia.org/wiki/Net_Promoter
All trademarks property of their respective owners.
How can you use it?
10
Top-Down* NPS
Measured at an organisation
/ organisation unit level to
compare to key competitors
Bottom-Up** NPS
Measured directly after
customer interaction at
designated key touch-points
* Also termed “Relationship” NPS
** Also termed “Transactional” NPS
Source: Adapted from “Creating customer loyalty”, Allianz Capital Markets Day, July 2006
NPS can be used in
many ways but two of
the common approaches
are:
• Top-Down NPS
measures the business
or business unit’s NPS
score. This is useful to
track competitive
scores, and drive
management incentive
plans.
• Bottom-up NPS
measures a
transaction’s NPS and
is very useful (when
used correctly) in
identifying what
service factors drive
NPS/customer loyalty.
That allows the
company to make
changes to its process
and service delivery
mechanisms to lift NPS
both at the Bottom-Up
and Top-Down level.
• Used as a company wide KPI to
measure customer focus
• Benchmarking against competitors
• Management incentive plans
• Institutionalise frontline feedback
• Change management tool to focus
attention on the customer
• Diagnostic tool to understand what
drives customer loyalty
What is a good NPS score?
11
A good NPS score
depends entirely on your
industry and country.
In many respects it is
better to consider your
company’s NPS score as
a target that you want to
try and exceed each
quarter or year. Trying
to compare your score to
other companies,
especially in other
industries, is often not a
useful tactic.
Source: NPS® Benchmark Charts, Satmetrix, March 2010
Want more information?
Here are some links to Net Promoter information that you may find
useful:
• Do I need to pay to use Net Promoter®?
• 7 Steps to Best Practice Net Promoter Score® Implementation
• Net Promoter Score® Success Stories and Case Studies
• Transactional Net Promoter Score®: Which is the best way to collect data?
• Transactional Vs Relationship Customer feedback: Are you using the right one?
• 6 Net Promoter® Best Practices You Can Use Today
• 5 More Best Practices for Net Promoter® Implementation
• Net Promoter Score®: How Much Can You Improve – Real Company Data
• How to Set Net Promoter® Targets for Your Organisation and Staff
• How To Drive Customer Experience Innovation Using Transactional NPS®
12
Net Promoter Score (NPS) Implementation
• If want to implement an effective NPS score program we can help get you started. We have substantial
experience in NPS implementation and started helping our customers to use Net Promoter Score way back
in 2004.
• Best Practice implementation services
– Genroe has developed and tested the Best Practice Net Promoter Score Implementation process with a range of
large and small, B2B and B2C organisations. The Best Practice process includes a series of detailed program
steps and workshops to deliver not just a new measurement but also the change management needed to make
it a long term success.
– Read more about the Genroe Best Process Net Promoter Score Implementation process
• Software tools to collect and manage data
– Sending out a one shot customer survey is easy but to create an on-going data collection and analysis process
requires the right tools. Genroe resells CustomerGauge, a best of breed Net Promoter Score data collection,
reporting and analysis tool that takes this complex process and makes it easy to run.
– Read more about CustomerGauge NPS data collection, reporting and analysis software
• Customer feedback services to collect and analyse the data
– Often in a business to business context the depth and complexity of the customer relationship requires more
than an email survey. The Genroe High Value B2B Customer Feedback Process incorporates Net Promoter
approaches in a multi-layered approach that includes face to face and telephone surveys.
– Read more about the Genroe High Value B2B Customer Feedback Process
• Want to chat about how you might use NPS in your business. Call us now:
– Telephone
• +61 2 9191 4700 /02 9191 4700
– Email
• info@genroe.com.au13

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Net Promoter Score - A 10 Slide Introduction

  • 1. Net Promoter Score® – A Brief Introduction We talk to lots of people about Net Promoter Score and there are many mis-conceptions about it. So we put together this brief introduction to answer the questions we hear most often. Do you have a question that’s not here? Let us know on info@genroe.com.au and well provide you an answer. © Genroe (Australia) Pty Ltd. All Rights Reserved Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld Contact Us At www.genroe.com info@genroe.com.au Australia L39 Citigroup Centre, 2 Park St, Sydney T +61 2 9191 4700
  • 2. Agenda • What is it? • Where did it come from? • What’s wrong with using Customer Satisfaction? • Why is it such a big deal? • So who uses it? • How can you use it? • How do you calculate it? • What is a good score? • Some additional FAQs 2
  • 3. What is it? 3 On a scale 0-10, how likely is it that you would recommend our company to a friend or colleague?" 0 1 2 3 4 5 6 7 8 9 10 Detractors Promoters Net Promoter Score = % of Promoters - % of Detractors OR said another way Net Promoter Score = # Promoters - # Detractors Total Responders Total Responders Put simply, the Net Promoter Score is the result achieved when you survey your customers with the “would you recommend” question. Subtract the percentage of 0s to 6s from the percentage of 9s and 10s and that gives you the NPS. Neutral
  • 4. Where did it come from? 4 The research that originally identified the Net Promoter Score was performed by Frederick Reichheld from Bain in concert with a company called Satmetrix. The results of the research were first broadly published in a Harvard Business Review Article in December 2003. Since that time numerous books (some by Reichheld) have been published to expand on the concept of Net Promoter Score and help organisations implement programs to measure and improve their scores. Source: “The One Number You Need to Grow, Harvard Business Review 2003, Frederick Feichheld
  • 5. What’s wrong with using Customer Satisfaction? 5 There is nothing wrong with Customer Satisfaction as a measure. It’s just that the research that was done into Net Promoter Score showed that Customer Satisfaction is often not the best indication of customer loyalty. The trouble is that plenty of satisfied customers defect from businesses every day. So, if customer loyalty is the goal, Customer Satisfaction just isn’t that useful. On the other hand, the goal of the NPS research was to find a measure that captured future customer loyalty and therefore profitability. This chart illustrates the frequency with which each of the different loyalty questions emerged as the top correlate to actual customer behaviour when testing these links across six different industries. Source: “The Power Behind a Single Number”, Satmetrix Vs
  • 6. Why is it such a big deal? 6 The primary reasons that NPS has become so popular are that it is: • Simple to understand and calculate • Not a complex combination of multiple metrics with different weightings; • A leading indicator • It predicts future outcomes; and • Correlated to business growth All these points are important but the last is critical. NPS is one of very few (if any) measures that have been shown to correlate to business growth. Put simply if you increase NPS you will more than likely increase revenue. Four research examples of the correlation between Net Promoter Score and income growth. All showing a solid link. Sources: “The One Number You Need to Grow, Harvard Business Review 2003, Frederick Reichheld “The Power Behind a Single Number”, Satmetrix “Advocacy Drives Growth”, London School Economics, December 2005 Bain & Company Experience
  • 7. Okay, but does it work? Yes – Business to Business B2B companies adopting the Net Promoter discipline, successful companies saw an average of 23% increased revenue growth.” Sources: “Answering the Ultimate Question: How Net Promoter can Transform your Business”, Brooks, Lara, 2009 Satmetrix, Improving Net Promoter Scores in Business to Business Relationships Net Promoter Conference 2009 Forrester via Satmetrix, “Building the Foundation for an Action Oriented Net Promoter Programme” Net Promoter Conference, June 2010 BeyondPhilosophy, Forrester via http://www.slideshare.net/BeyondPhilosophy/customers-are-irrational-stop-fighting-it Business Telco provider used NPS process to increase orders by 150% IT Product Supplier used NPS process and identified new opportunities in 39% of follow-up meetings Global B2B achieved 100%+ increase in loyalty, double digit growth in mature market Global Facilities company has improved retention rates by 46%, using NPS process For more case studies see this post: Net Promoter Score Success Stories and Case Studies
  • 8. Okay, but does it work? Yes – Business to Consumer Global Communications business increased sales by 13% in a single digit growth industry. [2].” Sources: “eBay – Making it Work – What Your Data is Really Telling You”, 2009 Forrester via Satmetrix, “Building the Foundation for an Action Oriented Net Promoter Programme” Net Promoter Conference, June 2010 A&E Television Networks – Boosting Return on Ad Spend and Consumer Engagement with Advanced Net Promoter Segmentation.” 2008 ResponseTek, “Major Telecom Company Increases NPS® by 25% in 100 Days” RT Case Study TopTelcom 062810, 2010 http://management.fortune.cnn.com/2012/04/19/american-express-customer-service/ nib health funds: Checking Up On Customer Loyalty. Major Telecom company: 25 point increase in NPS which lead to a 3% reduction in early life churn and 5% increase in first call resolution. eBay found average revenue is consistently higher for Promoters than Detractors, across their 6 top markets. Amex says: “…a promoter … [gives] 10% to 15% increase in spending and four to five times increased retention” nib health funds found the risk of attrition for Detractors is 1.5 times Promoters. A&E Television found that NPS and Ratings are correlated for Television shows: Low NPS drives Low Ratings, High NPS drives High ratings. For more case studies see this post: Net Promoter Score Success Stories and Case Studies
  • 9. So who uses it? 9 Many global and domestic companies use Net Promoter Score in their business including: • General Electric • Honeywell • Procter and Gamble • Allianz • American Express • BearingPoint • Intuit • Verizon Wireless Source: http://en.wikipedia.org/wiki/Net_Promoter All trademarks property of their respective owners.
  • 10. How can you use it? 10 Top-Down* NPS Measured at an organisation / organisation unit level to compare to key competitors Bottom-Up** NPS Measured directly after customer interaction at designated key touch-points * Also termed “Relationship” NPS ** Also termed “Transactional” NPS Source: Adapted from “Creating customer loyalty”, Allianz Capital Markets Day, July 2006 NPS can be used in many ways but two of the common approaches are: • Top-Down NPS measures the business or business unit’s NPS score. This is useful to track competitive scores, and drive management incentive plans. • Bottom-up NPS measures a transaction’s NPS and is very useful (when used correctly) in identifying what service factors drive NPS/customer loyalty. That allows the company to make changes to its process and service delivery mechanisms to lift NPS both at the Bottom-Up and Top-Down level. • Used as a company wide KPI to measure customer focus • Benchmarking against competitors • Management incentive plans • Institutionalise frontline feedback • Change management tool to focus attention on the customer • Diagnostic tool to understand what drives customer loyalty
  • 11. What is a good NPS score? 11 A good NPS score depends entirely on your industry and country. In many respects it is better to consider your company’s NPS score as a target that you want to try and exceed each quarter or year. Trying to compare your score to other companies, especially in other industries, is often not a useful tactic. Source: NPS® Benchmark Charts, Satmetrix, March 2010
  • 12. Want more information? Here are some links to Net Promoter information that you may find useful: • Do I need to pay to use Net Promoter®? • 7 Steps to Best Practice Net Promoter Score® Implementation • Net Promoter Score® Success Stories and Case Studies • Transactional Net Promoter Score®: Which is the best way to collect data? • Transactional Vs Relationship Customer feedback: Are you using the right one? • 6 Net Promoter® Best Practices You Can Use Today • 5 More Best Practices for Net Promoter® Implementation • Net Promoter Score®: How Much Can You Improve – Real Company Data • How to Set Net Promoter® Targets for Your Organisation and Staff • How To Drive Customer Experience Innovation Using Transactional NPS® 12
  • 13. Net Promoter Score (NPS) Implementation • If want to implement an effective NPS score program we can help get you started. We have substantial experience in NPS implementation and started helping our customers to use Net Promoter Score way back in 2004. • Best Practice implementation services – Genroe has developed and tested the Best Practice Net Promoter Score Implementation process with a range of large and small, B2B and B2C organisations. The Best Practice process includes a series of detailed program steps and workshops to deliver not just a new measurement but also the change management needed to make it a long term success. – Read more about the Genroe Best Process Net Promoter Score Implementation process • Software tools to collect and manage data – Sending out a one shot customer survey is easy but to create an on-going data collection and analysis process requires the right tools. Genroe resells CustomerGauge, a best of breed Net Promoter Score data collection, reporting and analysis tool that takes this complex process and makes it easy to run. – Read more about CustomerGauge NPS data collection, reporting and analysis software • Customer feedback services to collect and analyse the data – Often in a business to business context the depth and complexity of the customer relationship requires more than an email survey. The Genroe High Value B2B Customer Feedback Process incorporates Net Promoter approaches in a multi-layered approach that includes face to face and telephone surveys. – Read more about the Genroe High Value B2B Customer Feedback Process • Want to chat about how you might use NPS in your business. Call us now: – Telephone • +61 2 9191 4700 /02 9191 4700 – Email • info@genroe.com.au13