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What is a Net Promoter Score? (And Why Does it Matter?)

What is a Net Promoter Score? (And Why Does it Matter?)

I just love “Customer Service.”

You know the kind that you get when you don’t expect it. Read Amazon’s social media threads or even better become a customer… you will get it. It is amazing how little things like answering the phone, respecting the customer (regardless if they are right or wrong) or just showing empathy when a customer wants to complain can go a long way to providing a positive experience. When I see these best practices in place, I want to tell everyone around me about the superior customer service I just experienced. And vice versa, when I don’t see customer service best practices in place or find service that leaves much to be desired, I go out of my way to authentically share my neutral or negative experience with the store GM, the customer service agent or anyone at that company who will listen. Why? Honest and insightful customer feedback is the elixir of improving your product and your services. The best measure I—and most companies—use is the Net Promoter Score.

What is a Net Promoter Score?

Promoters are the key to growing a business. In 2003, Frederick Reichheld wrote an article in the Harvard Business Review entitled The One Number You Need to Grow. In it, he developed a methodology for understanding customer satisfaction, and thus the Net Promoter Score (NPS) was born.

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“On a 0 to 10 scale, how likely is it that you would recommend our product, service or brand to a friend or colleague?” That is it, those exact words. Simple. Concise. Impactful.

The Key to NPS:

  • If you selected 9-10 on the scale: You are a Promoter: The product, service or brand has enriched your life. You are a loyal customer who recommends your brand to family, friends or colleagues.
  • If you selected 7-8 on the scale: You are Passive: The product, service or brand met your expectations but did not exceed them.
  • If you selected 1-6 on the scale: You are a Detractor: You reluctantly purchased the product, service or brand and/or had a bad experience.

The Net Promoter Score is simply calculated by taking the number of promoters and subtracting the number of detractors then dividing that number by the total number of respondents and multiplying that number by 100. Resulting scores will range from -100 to 100, with scores above 0 typically considered to be good and scores above 50 considered excellent. The score is used to gauge the customer’s overall satisfaction with a company’s product or service and the customer’s loyalty to the brand.

For example: Let’s say you received 1300 responses to your NPS survey. Of those scores:

  • 550 people provided a score of 9 or 10.
  • 400 people provided a score of 8 or 7.
  • 350 people provided a score of 6 or below.

To calculate the NPS score you would subtract 350 from 550 which equals 200, then divide 200 by 1300 which equals .1538, then multiply that by 100 which will result in an NPS of 15.38. It’s that simple.

But NPS is more than just a score. The number itself is just that, a number. So it’s important to use the score as a benchmark to continually improve upon. Your success depends on a few essential elements:

    1. Read the Comments:

      The true value of NPS is in the actual comments. Read every comment and do not rationalize away the bad ones. In fact, put most of your focus on them. When you understand why someone is having a negative experience with your brand, it is like finding gold.

    2. Make the Changes:

      Now that you have the data and information, make the necessary changes to improve your service or product. Don’t hide from the need to make changes (I see you United Airlines and your plane passenger removal procedures.) Be proud of the changes you make and share your improvements We all need to improve.

    3. Rally the Team:

      Your team and the organization should be just as excited about NPS-time as the CEO. Rally the troops and provide them with an aspirational goal to turn every client into a Promoter. They can do it!

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The best part about the NPS methodology is that it can be used in a variety of industries, even within the education space.

Net Promoter Score in the Education Space

At the Jack Welch Management Institute, our mission is to transform the lives of our students. Therefore, we take NPS very seriously. Each quarter, we survey our student population to ensure that JWMI exceeds their expectations in offering them the highest level of service. We pay particular attention to detractors and what they are telling us about the brand and their experience. If a detractor requests, we will call them to better understand their evaluation of our service. We want to hold ourselves accountable so we can work to innovate in future quarters.

Jack Welch Management Institute’s NPS Score:

80+ with a 60% response rate for over three consecutive quarters.

At JWMI, we are pretty proud of our score and continue to strive for student satisfaction quarter after quarter. With an education industry NPS average of 54, we are at the top of the pack, leading some of the most prestigious institutions*:

  • Harvard Business School: 41
  • Wharton School of Business: 51
  • Duke’s Faqua School of Business: 67

Our score is also competitive with some of the world’s leading brands:

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  • Costco: 79
  • Starbucks: 77
  • Zappos: 57
  • Apple: 47
  • Amazon: 25
  • Bank of America: -24

Jack Welch Quote: Only 3 Things Matter in a Great Business, Customer Satisfaction, Employee Satisfaction, Cash Flow
But, why does NPS matter?

Sure, there are some bragging rights to our NPS score. And, true to Jack Welch principals, we love to celebrate wins.

However, our most significant satisfaction comes in seeing JWMI students succeed while applying the tools and materials from the program. The student is our customer. Every decision we make as an institution is in service to deliver value for our students. Because we hope that the value will pay out in tangible wins like promotions, raises, new jobs and increased responsibilities. Those wins energize people and create a passion that is contagious. We see it in our LinkedIn networking group, a community that celebrates each other’s achievements. And when one person wins, we all win. Individuals build better teams, teams create new products or services, and their organizations win. It’s a positive experience that builds upon itself, and we are excited to be a part of it.

But, it all starts with you. Have you filled out your survey?

 

JWMI

For more information on the Jack Welch Management Institute visit us.

Sources:
1. Based on 476 survey respondents among 500 JWMI students surveyed during the final quarter of their program between March 2015 and March 2017.
2. Byrne, J. (30, November 2015). Poets & Quants. A Business School Where MBA Students Are Really The Customers.
3. https://customer.guru/net-promoter-score/benchmarks

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