Understanding Net Promoter Score (NPS): Top 5 Questions Answered
Net Promoter Score (NPS) is a popular and often useful measure, but using it in can often raise practical challenges.
Here, we tackle five frequently asked questions about NPS to provide clarity and guidance.
1. Is NPS more volatile than other measures?
The answer is a resounding 'yes'. NPS can fluctuate more than other metrics due to the way it is calculated, effectively discarding the Passives who score 7 or 8.
Because of this inherent volatility:
Businesses might require larger sample sizes to get an accurate read on customer attitudes. If you can't increase your survey sample size, an alternative to consider is rolling data over a month or quarter in order to stabilise the findings.
It's crucial to be aware of the margins of error associated with your NPS to ensure that the insights drawn are valid and actionable. Your margin of error will depend on your proportion of Promoters, Passives, and Detractors as well as sample size, but as a rule of thumb a sample size of 50 might give you a margin of error of around +/- 22, 100 might be +/- 15, 200 +/-10, and 400 +/-7.
2. Should we include a “don’t know” option?
Absolutely. When gathering feedback, it's essential to respect the customer's perspective and not force them into giving an answer.
By providing a "don't know" or "neutral" option, you give them the option to be honest, and that means a more accurate score.
3. Is NPS the best metric for everyone?
While NPS is a popular and useful metric, it's not a one-size-fits-all solution.
Before integrating NPS into your survey, ensure that the question makes sense to your target audience. Do you offer the kind of product or service that customers realistically recommend?
The rationale for using NPS depends on it being strongly linked to real customer behaviour, so validate NPS as a measure for your organisation by showing that it correlates with customer behaviours that are beneficial for your organisation. If the score doesn't align with observed behaviors, it might not be the right metric for you.
4. Should we focus on detractors or passives?
The direction to take here largely hinges on your current NPS standing. Avoid the pitfall of spreading your efforts too thin. Addressing both detractors and passives simultaneously can dilute the impact of your initiatives.
As a rule of thumb, if you're lucky enough to have a high NPS, it's more beneficial to concentrate on transforming Passives into Promoters. It's likely that you don't have many Detractors, so the focus for you should be on "Good to great".
If your NPS is lower and you still have a notable proportion of Detractors, then diagnosing and fixing the causes should be your focus.
5. Is NPS a percentage?
A common misconception, but no, NPS is not a percentage.
NPS is measured on a scale ranging from -100 to 100. While the calculation is rooted in percentages (the difference between the percentage of Promoters and Detractors), the final NPS value is not a percentage in itself.
That said, if the biggest worry you have about your NPS is whether or not to quote it as a percentage, you're probably doing ok.
In conclusion, while NPS is a powerful tool for gauging customer loyalty, it's not an "off the shelf" solution that an organisation can adopt without thought. If NPS is right for you, make sure you take the time to deploy it in the way that makes most sense for you, your staff, and your customers.
After 23 years in customer insight, Stephen's view is different to most. He believes that creating great customer experiences is simple (though rarely easy). Insight comes from asking customers the right questions, and listening to what they say. Building a customer-focused culture is more important than improving your processes. Proving the ROI of customer experience is easier than you've been told.
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