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Four Steps to Reach Your 2013 Net Promoter Score Goal

  
  
  

customer loyalty meter
Set aside for another day the ongoing debate about the merits of Net Promoter Score as a corporate metric. Your company, among a growing number, has decided to use NPS to measure customer loyalty, and has set a corporate NPS goal for 2013. Today’s concern isn’t whether it’s a good goal—it’s how to reach it.

Here are four simple planning steps that can help:


1. Understand the math underlying both your current and aspirational scores.

NPS has taken off as a corporate metric primarily because of its simplicity. It’s a single number and easy for an entire organization to track. A negative consequence of this simplicity, however, is a tendency to minimize the components of the score. This is a problem because scores can be derived from an infinite number of possibilities.

For example, an NPS of 50 could result from 75% promoters, 0% passives, 25% detractors; but it could also result from 50% promoters, 50% passives, and 0% detractors. Strategies to improve the score would be completely different between the two scenarios, so breaking down the score into its components should always be your first step.
 

2. Identify the causes of promoter defection and take appropriate action.

The first thing most companies do to improve NPS is to focus on detractors. Resist this urge, because the low-hanging fruit of NPS improvement is promoter retention. Customer perceptions are constantly evolving and you will likely have customers who shift NPS segments during the year. Of all the possible segment shifts, promoter to detractor is the most damaging: You lose a promoter from one end of the calculation and add a detractor on the other end—doubling the negative impact. Proactively identifying promoters at risk of becoming detractors and addressing their issues should be your top priority.

The good news: This is by far the most cost-effective lever to increase your NPS. Your current promoters already like you, and maintaining their support is easier than trying to appease disgruntled customers. ZS recommends identifying reasons for promoter defection by implementing a representative customer panel that is surveyed multiple times over a set period. We then hone in on customers who shift segments and use both survey and behavioral data to identify the root cause of various segment shifts, specifically promoter to detractor. This valuable insight can drive action toward preventing future promoter defection. 


3. Focus on addressing actionable themes from 5/6 Detractors.

Converting detractors is the next step, but not all detractors are the same. Focus your attention on detractors most likely to move up, the 5’s and 6’s. Our research illustrates that “5/6” detractors typically represent 45% to 65% of the detractor population. Additionally, their issues tend to be more addressable. You have not completely lost them yet, so they will still give you an opportunity to acknowledge and address their concerns. Taking these steps can go a long way toward converting them to passives or even promoters.
 

4. Don’t lose sight of the real objective

While it can sometimes be easy to forget, your company set an NPS goal to focus the organization, and you, on delivering a better customer experience. The ultimate score is less important than the insights you gain and the actions you take based on the insight. Continue to reinforce a customer-centric culture throughout your organization—and improvements in NPS will follow. 


About the Author

Raj Sivasubramanian is a Consultant in ZS Associates' San Mateo office. Raj, a core member of ZS's High Tech Practice, focuses primarily on working with clients to develop their customer insights capabilities. Raj holds a B.S. in Electrical Engineering from Georgia Tech and an M.B.A. from the Haas School of Business at the University of California at Berkeley.


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Comments

The article is good but how I am to set the NPS goal for the next FY? I mean to say is my NPS is 60% , how much should I set for the next year and how to determine this ? Any valuable input will be of great help.
Posted @ Friday, July 25, 2014 2:20 AM by Dipanmoy
Thanks for the question, Dipanmoy. While setting an NPS goal is very specific to company’s unique situation, here are a few considerations that come to mind: 
 
- What’s the makeup of your current NPS score and what improvement is possible in the time frame you have in mind? 
o A NPS in the 60s is relatively high and the higher your current score, the harder it will be to incrementally improve in a given time frame. 
o You should also consider the distribution of Detractors/Passives/Promoters in your current score, as a movement in NPS, is based on the change in distribution of D/P/Ps that you have. Your goal could be to drive greater Detractor-> Passive movement, to prevent Promoter->Passive movement, or other combinations. Examine the makeup of your score, and how this distribution has been changing over time, and what the impact of future D/P/P changes (i.e., goals) would have on the resulting NPS score. 
- What’s the competitive context for your NPS score? 
o NPS is a relative measure and it’s important to understand your score relative to top competitors and what’s a reasonable level for improvement based on comparable historical performance. 
o I have seen NPS goals set around closing the gap (or widening it, if you’re the leader) relative to a leading competitive NPS score 
- What are the key drivers behind your NPS? 
o Beyond just the score, it’s imperative your company understands the key drivers behind your NPS, and what it takes to remove barriers to recommendation, and to accelerate the things that lead to higher recommendation. Analytics on survey questions & attribute ratings, text analytics on open-ends – there are many ways you could do this, depending on how you are collecting your NPS data. 
o Identifying the key drivers of recommendation and properly aligning secondary goals around these drivers (as opposed to the primary NPS goal) is critical to driving desired NPS improvement. 
- How well are you able to model & show linkages between NPS and both operational data & business outcome/financial data? 
o If you are able to show how well NPS serves as a leading/lagging indicator of financial performance in your company – and how movements in operational/transactional data connect to NPS changes – you will have a way to define the role of NPS at different levels, and for different stakeholder groups in your organization. Movement in operational data (such as service level performance) can be seen & acted upon very quickly, which lead to movement in customer engagement (such as NPS or c-sat), which lead to movement in resulting business outcomes (such as acquisition, retention, or share of wallet). 
- What level of improvement is statistically significant? 
o While this might be obvious, it’s important to ensure the incremental NPS goal is large enough to be outside the margin of error based on your company’s survey sample sizes
Posted @ Thursday, July 31, 2014 9:50 AM by Erik Long
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