Turning Customer Feedback into Growth: Unwinding the Net Promoter Score (NPS)

We're working tirelessly, yet the profits we need still elude us. It feels like we're sprinting on a treadmill. After digging deeper, we found high client turnover and questioned if we’re earning or just buying business. Some customers say we’re hard to work with—what does that mean, and how can we fix it?

These are tough questions we’ve heard from our clients. One effective way to address such issues is through a customer experience project, often utilizing the Net Promoter Score (NPS). Introduced by Fred Reichheld in 2003, NPS revolutionized how organizations measure their impact on people by focusing on loyalty.

The NPS question is simple yet powerful: "How likely are you to recommend our company, product, or service to a friend or colleague?" Customers rate on a scale of 0 to 10, where 0 means "not at all likely" and 10 means "extremely likely." This is often followed by a free-response question to understand the reasons behind the score and/or a dropdown menu to elaborate on their rating. This feedback helps companies identify areas for improvement and build on their strengths.

To calculate your NPS, subtract the percentage of detractors (those who score 0-6) from the percentage of promoters (those who score 9-10). Passives (those who score 7-8) don’t factor into the calculation but are still important. For example, if 70% are promoters, 20% are passives, and 10% are detractors, the NPS would be 60. Scores can range from -100 to 100, with higher scores indicating greater loyalty.

Many companies use NPS not just to gauge customer loyalty but also employee engagement. They’ve found innovative ways to leverage this metric to transform operations and enhance overall impact.

However, calculating NPS isn’t without its challenges. Recently, Reichheld addressed the issue of non-responders, suggesting two approaches: scoring all non-responders as detractors or considering them as a 50-50 mix of passives and detractors. While some businesses find these methods useful, many stick with the traditional approach due to practical challenges such as:

• Spam filters and outdated emails create non-responders, not detractors.
• Even non-responders who receive the email should not be treated as detractors because many "raving fans" do not fill out surveys due to time constraints, distractions, and more.
• Most detractors are actually more likely to fill out the survey because angry and frustrated customers share their opinions more than happy customers, according to research. Although recent recent has shown that to be changing.
• Relatively few customers, however, share their feedback directly with a company. This occurs for a variety of reasons. Many customers state they do not want to waste their time because they don't believe it will make a difference.

Treating non-responders as detractors can introduce new complexities. This ongoing debate highlights the evolving nature of NPS methodologies and the challenges of taking on such an effort. When it comes to this shift, we believe you can account for non-responders in a more thoughtful manner using basic research that exists to guide you. Planning, communicating, and even marketing your initiative is paramount. Customers need to know their voice matters and can make a difference.

Understanding and acting on NPS can be a game-changer. It provides a clear, actionable metric that can help turn customer feedback into a roadmap for growth and improved customer experiences if approached well. Good luck delighting your customers!