NPS (Net Promoter Score)

NPS (Net Promoter Score)
NPS®, or Net Promoter Score, is a valuable indicator of customer satisfaction. This metric, which has risen to prominence over the last 10 years, was invented by Fred Reichheld, Bain & Company and Satmetrix. NPS® was first explained in the book The Ultimate Question, published in 2006, but what exactly does it measure?  

Definition

 This indicator asks customers if they would recommend the brand or product to their friends and family, with a degree of likelihood ranging from 0 (not at all likely to recommend) to 10 (yes, would definitely recommend). Customers who give an answer between 0 and 6 are known as “detractors”, while those who respond with a 9 or 10 are called “promoters”. The Net Promoter Score is the difference between the percentages of promoters and detractors.  

What is relational NPS?

Relational NPS is a time-indifferent metric. In some cases, the customer may not have had any contact with the brand in a long time. The goal is to measure the customer’s overall feelings about the brand. The latest news about the company, its brand recognition and its identity play a preponderant role in this score. Relational NPS enables the brand to monitor changes over time, adjust its values and strategy and track the performance of its competitors.  

What is transactional NPS?

This is an on-the-spot measurement taken after a purchase, an appointment at a branch, an interaction with customer service or any other contact with the brand along the customer journey. Transactional NPS, unlike relational NPS, fluctuates dramatically according to specific situations.  

How is it calculated?

To determine the NPS score, subtract the percentage of detractors from the percentage of promoters. Passive customers are not included in the calculation.   Consider the example of a ready-to-wear brand. Brand X has 60% promoters (customers who gave a 9 or 10), 30% passives (scores of 7 or 8) and 10% detractors (scores between 0 and 6). What is its NPS? 60 – 10 = 50 The NPS for Brand X is 50. Another example: a banking network. It has 20% promoters, 50% passives and 30% detractors. 20 – 30 = -10 Thus, the bank’s NPS is -10.   It is important to note that the figure obtained is not a percentage, but rather a score. The diagram below summarizes the method for calculating NPS: NPS (Net Promoter Score) Another key point is that you must have a minimum number of respondents to obtain a representative ‒ and therefore actionable ‒ score.  

How is it used?

The NPS alone does not teach you very much. The winning combination is to measure NPS while collecting customer comments that are packed with insights. By analyzing and synthesizing your customers’ comments, you will have everything you need to create operational action plans to improve the customer experience. Be wary of cultural differences! As is the case with customer satisfaction, NPS is very closely tied to the local culture. In a country like the United States, a positive inclination to recommend could translate to scores of 9 or 10 (which are common), but a French consumer would reply with a 7 or 8, simply for cultural reasons. This is why you should tread carefully when making comparisons between countries within a single company. You should also be careful when comparing NPS results for different companies in the same sector because they are rarely measured in the same way. They are taken at different moments in the customer journey on different survey platforms, etc. These caveats prompted Mediatech-cx to collaborate with PMP Conseil to create a study whose fieldwork is carried out by IFOP. As a result, businesses can compare the Net Promoter Scores of different companies in the same sector in a way that is decoupled from interactions between the brands and their customers. You can download the full study, “Customer Journey Observatory” here: (insert link) Finally, remember that what matters most is the change in the indicator, not the score in and of itself. NPS is highly variable and a function of your business sector, the strength of your brand and what is happening on the ground in real time. Whether you are at +50 or -50, an increase in your score over time is what will create positive momentum in your organization and motivate your employees to deliver customer satisfaction.

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