NPS® and client satisfaction: what, how, why?
What is the NPS® ?
(or Net Promoter Score®, for experts)
It is a measure of client satisfaction and loyalty. We measure it by asking a very simple question to our clients:
How likely is it that you would recommend us to a friend or colleague?
The answer choices range from 0 (very unlikely) to 10 (very likely). The results of the question are represented by a value that varies between –100 and 100. For example, if I have an NPS score of 50, my clients are generally very satisfied!
Then, the following question is asked: “What motivated you to assign this rating?”, in order to know the reasons which justify the respondent’s answer.
A bit of history
The NPS measure was developed in the 2000s by Frederick F. Reichheld1, author and business strategist. Reichheld was looking for a simpler way to determine client satisfaction than the “traditional” questionnaires, which are too long and too complicated to analyze.
With the help of Bain & Company, Reichheld collected more than 2 years of data before publishing his findings about NPS in the Harvard Business Review magazine.
His work allowed him to see that a business has a better chance of growing:
- if it has more promoter clients (positive NPS score) than detractor clients (negative NPS score);
- if its NPS score is shared within its organization.
Having a positive score is therefore an important measure, because it is a tangible indicator of success.
How do we calculate the NPS?
To understand the logic behind the score, you first need to know the formula (a little bit of math never hurt anyone).
% of promoter clients -% of detractor clients = NPS
There you go, it’s that easy!
Ok, actually there’s something missing.
How is the ranking of clients established? They are classified into three categories based on the value of their response.
“How likely are you to recommend us to a friend or colleague?“
So by comparing the percentage of detractor clients and the percentage of promoter clients, we get the famous NPS score.
What is a good NPS score?
You may not like the answer: It depends!
A score greater than 0 will always be positive. It means that you have more promoter clients than detractor clients. Well done!
However, you have to take into consideration the industry in which you operate. For example, in the United States, the telecommunications industry does not have very high NPS scores (the industry average is 01)2, since it is a rather stagnant market with few competitions (and which does not always offer good customer service).
On the other hand, Apple, recognized for the quality of its products and for its good customer service, has an excellent NPS score of 60 (2020)3. Another example, DHL, an international shipping company, also stands out with a score of 38 (2020)4.
It is therefore important to consider the reality of your industry before interpreting your score. But at the end of the day, everyone has the same goal: to increase their score!
Why is it relevant to know your NPS score?
The NPS score and the comments collected can tell you a lot about the satisfaction of your clients. What are your strengths and weaknesses? What could you improve to ensure client retention? The data collected, survey after survey, will help you understand the overall image you project to your clients.
The NPS is a very simple measure to interpret and which is directly related to the satisfaction of your clients. It is therefore a simple, yet powerful tool that allows you to quickly identify what is wrong with your service offering so that you can act quickly and thus be more proactive than the competition.
How to survey your clients ?
Do not hesitate to contact us for more information.