For every business, whether a small shop on the corner of a local street or a famous enterprise with branches all around the globe, nothing is more valuable than a loyal ambassador who promotes it. This ambassador can either be a customer who talks about his experience with the business wherever he goes and attracts potential other customers or an employee who enjoys the culture and atmosphere so much that he tries to convince others to join him in the company.
Nowadays, these ambassadors, or better be said, promoters, are considered among the most vital needs of any business. They help businesses grow in popularity, help them increase in profit and overcome different challenges. This is why a high number of companies are striving in the path of turning a simple employee or a customer into a loyal promoter.
But how can we, as a business looking for a way to improve our CX and EX, measure how satisfied and, even more than that, loyal our customers and employees are? How can we improve the level of loyalty they have right now to ensure our business has ambassadors promoting their amazing experience everywhere they go?
This can be simply done using an indicator named Net Promoter Score. NPS is one of the most interesting concepts in the experience field that everyone who is interacting with customers and employees needs to have in-depth knowledge about it.
Stay tuned with us as in this article from Pisano Academy, we are going to answer the question What is Net Promoter Score and why is NPS important?
What is the Net Promoter Score?
Net Promoter Score is an experience metric that measures the satisfaction and loyalty that a customer or an employee of a company has. Developed by Fred Reichheld and published in Harvard Business Review in 2003 in conjunction with Bain & Company, NPS is based on the fact that if a customer enjoys the service or product they received from a company, they will recommend it to the people around them.
This metric which is easily measured divides the people interacting with a company into three different categories based on their approach to the company: Promoters, Passives and Detractors. These three categories are different from each other in the amount of satisfaction they have experienced when interacting with the company, either as a part of the team or as someone benefiting from the services provided by it.
While the Promoters tend to be the ambassadors of a company who advertise their positive experience, the detractors are the unsatisfied customers who try to prevent people around them from interacting with it. The people in between, the passives, as their name suggests, are those who neither promote nor detract their family, friends and colleagues from a company.
Although NPS indicates the loyalty of both customers and employees, the term eNPS or employee NPS is used when referring directly to the metric when talking about how loyal a company’s staff are. Employee Net Promoter Score is considered as a type of NPS more focused on the relationship between an employee and the company he works for.
With the measurement of eNPS, a business can find out if their employees are happy with their life and work at it. eNPS can help a company with various aspects of the employee-business relationship such as work-life balance, the atmosphere, social engagement and the sense of purpose. Numerous researches have shown the relationship between a high employee NPS and the success a company experiences toward its goals. This shows how vital eNPS is and how the path to more tremendous success for a business passes through creating a better experience for the employees.
How to Measure NPS
With all its importance, the Net Promoter Score can be measured in a simple way: the ultimate question. This question can reveal how satisfied and more than that loyal your customer or, in the case of eNPS, your employee is.
The ultimate question of NPS is: “How likely are you to recommend the company to a friend a colleague?” And the respondent should answer it on a scale from zero, indicating the least likelihood, to ten, which shows the highest possibility. Once answered by the respondent, the result can be simply interpreted using the information listed below:
- Detractor: A score between 0 to 6 shows that the customer or employee is a detractor. These unhappy customers are most likely to be churned or defected, and their word of mouth will lead to a more negative impact on others.
- Passive: Scoring 7 and 8 in the results indicates that the respondent is passively satisfied. It means he is neither as satisfied as a promoter to become an advertiser of your brand nor as dissatisfied as the detractors to discourage others from interacting with your company.
- Promoters: Scoring 9 and 10 means your company turned a customer or employee into an ambassador. Due to their positive experience with your brand, not only will they stay by your side in the future, but they also will recommend you to others, improving your brand identity.
To calculate the overall score, you can subtract the percentage of detractors from the percentage of promoters. The resulting rate shows how successful you were in the process of creating a positive experience for your customers and employees.
Why is NPS Important?
NPS and eNPS provide feedback from two of the most valuable assets of a business: Customers and Employees. With the result provided by NPS measurement, a company can clearly determine where it is located on its path to customer or employee satisfaction. It also reveals if the company is providing a positive impact in comparison with its competitors.
As NPS is measured with a simple question, it is always easy to track it among the respondents without the risk of taking so much time or receiving imprecise responses. You can follow up with the NPS regularly and find out how well you are doing in regards to your strategies and policies and fix any errors on the spot.