The customer loyalty and satisfaction measure the Net Promoter Score (NPS), established by Bain & Company in 2003, is an evaluation tool designed by Fred Reichheld, a partner in the company. It is a one-question survey, which evaluates how an organisation treats the people whose lives it affects. It measures the state of the company, organisation or product.
If one took South Africa as an investment destination, it would be as an example of an ‘organisation’. If a robust and representative sample was asked, both globally and locally, “How likely would you be to recommend South Africa as an investment destination to a friend or colleague?” Then if one used the NPS formula, explained below, one would probably get an accurate picture of the state of the nation, in investment terms at least.
Leading Growth Indicator
Extensive research has shown that your Net Promoter Score®, or NPS®, acts as a leading indicator of growth. If your organization’s NPS is higher than those of your competitors, you will likely outperform the market, and managing your organization to improve NPS will also improve your business performance. Whether you are aiming for faster growth or increased profits, use NPS as the foundation of a measurement framework that is tightly tied to the customer journey.
The NPS Calculation
Calculate your Net Promoter Scores using the answer to a single question, using a 0-10 scale: How likely is it that you would recommend [brand] to a friend or colleague? This is called the Net Promoter Score question or the recommend question.
Respondents are grouped as follows:
Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fuelling growth
Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
Subtracting the percentage of Detractors from the percentage of Promoters yields the Net Promoter Score, which can range from a low of -100 (if every customer is a Detractor) to a high of 100 (if every customer is a Promoter).
Driving action begins with delivering actionable customer insights to people throughout your organization. In the Surveway Kinetica methodology, the improved version of the Net Promoter approach, guides you to focus on democratizing your Net Promoter data, to ensure that employees at all levels feel empowered to act. Consider the roles and goals of employees who consume the information related to NPS. Broadly, they’ll fall into one of three categories: frontline, management, and executive. At every level, employees need to know what customers have to say about your business.