Net Promoter ScoreSM

Transcription

1 How to Use Net Promoter ScoreSM to Help Your Association Grow by Jeff Adler

2 Net Promoter Score Offers Crucial Insights for Associations The Net Promoter Score (NPS ) customer loyalty metric first gained widespread attention with publication of the 2003 Harvard Business Review article, One Number You Need to Grow. The author, Frederick Reichheld, created this paired-down satisfaction metric while working as a consultant for Bain & Company. Although originally designed with corporate America in mind, NPS when properly implemented can also deliver real value to those in the nonprofit arena, helping association executives gain such critical insights as: Members intent to renew Likely monetary contribution levels Expected spikes and dips in stakeholder engagement NPS can help you understand the overall performance of your association What Exactly Is the Net Promoter Score? The metric centers around a single question, roughly to the effect of: How likely is it that you would recommend our [organization/product/ service] to a friend or colleague? The answer scale for the question typically ranges from 0 to 10. Respondents who give ratings of 9 or 10 are classified as Promoters, while those giving ratings of 0-6 are classified as Detractors. The NPS is then calculated by subtracting the percentage of Detractors from the percentage of Promoters. (Respondents who give ratings of 7 or 8 are classified as Passives and don t add to, or subtract from, the NET promoter score). % of Promoters 9 or 10 classified as Promoters % of Detractors 0-6 classified as Detractors Net Promoter Score Page 2

3 Much of NPS initial popularity derived from its simplicity. Early on, Reichheld claimed the Net Promoter Score would be 100% accurate in determining revenue growth and predicted it would be the single most reliable indicator of a company s ability to grow. For some executives who saw market research as expensive, time consuming, complicated and difficult to understand, NPS sounded like the perfect panacea. You could just collect this one metric. It would be simple, quick and inexpensive. As Reichheld and others helped fan the NPS flame with further books and articles on the subject, prominent companies such as Charles Schwab, American Express, and Enterprise Rent-A-Car employed significant resources implementing the loyalty metric at their organizations. For best results, you ll want to track NPS over time Then in 2007, the Journal of Marketing published the first well known study appearing to refute the NPS as the be all and end all of market research. In response to the study, Reichheld himself acknowledged that NPS users had gotten carried away extending the one measure element far beyond what he had originally intended. But still, he argued, the simplicity of NPS one question, one number to track offered real value: Net promoter is effective, because it forces top executives, and other managers, to focus on creating happy customers. Reichheld s critics also made a valid point that focusing on a single number provided little to no insights into how an organization might improve. For this reason, those making successful use of the Net Promoter Score typically employ NPS as just one measure in a more extensive, coordinated market research program. What Value Could NPS Offer My Association? While the answer may vary by type of nonprofit (professional or trade association, cause-driven organization), you can expect NPS to perform at its best predicting intent to recommend which can be important in analyzing such measures as: Intent to recommend membership, board participation to peers Intent to recommend participation in conferences, training courses, certification programs and other activities Page 3

4 As is often the case for corporations, nonprofits can use NPS as an easily trackable summation metric to help guide management of the association. How Should We Begin a Net Promoter Score Program? The first time your association collects NPS, it may be just one number without context. The number itself is most useful when used to track important changes over time. According to Reichheld the average American company scores below +10 on the NPS, while the highest scores range from +50 to +80. However, scores vary greatly across a variety of factors, including sector and geography. Over time, as part of a broader research program, NPS can help you understand the overall performance of your association, and provide insights into opportunities to: Increase retention Grow monetary contributions Enhance overall member/stakeholder engagement Recruit new members Drive greater participation in activities In most cases you can probably add an NPS question to your existing survey without increasing your budget. For best results, you ll want to track NPS over time. An ideal time to implement the metric may be before you begin the next wave of your tracking study. Keep in mind that asking the NPS question itself will only aid you to a certain degree so be sure to also consult with a research professional on ways that a more extensive NPS program could benefit your association, including by developing a properly targeted and balanced research effort surrounding the drivers of NPS. What Are Some Best Practices for the Most Effective NPS Programs? Many NPS users quickly find that although NPS can be a very useful tool, a truly successful NPS implementation comprises only one part of a larger research program rather than focusing on just a single number. Open Ended Questions Often the first adjustment to the one number approach is the addition of open ended questions. The most common open ended question involves asking respondents why they gave their NPS rating. In our typical NPS programs, we then aggregate the responses of the Detractors and the responses of the Promoters. For NPS projects involving only online data collection, another common practice is a telephone follow Page 4

5 up. The percentage of respondents providing an open ended answer approaches 100% via phone, compared to perhaps 20% or fewer providing open ended responses online. A telephone follow up also enables researchers to probe the open ended responses for depth and clarity. Qualitative Research If it were true that only one driver at any point in time influenced intent to recommend, then perhaps the one-question NPS would provide all the information necessary to effectively lead an organization. However, this is rarely the case. Instead, without implementing a true research program, associations will likely struggle to understand what is causing moves up or down in their NPS. Frequently, therefore, in depth qualitative research also plays a crucial role in a truly effective NPS program. Depending on the nature of the association, combinations of the following may be deployed: In depth interviews Focus groups Bulletin board focus groups With qualitative research, the researcher can probe far beyond the depth of information that can be obtained from simple open ended questions about reasons for the NPS rating. Key Driver Analysis Results attained from the qualitative research can then be used to inform key driver analysis. Without the qualitative research, it would be difficult to know where to even begin key driver analysis. From the qualitative research, hypotheses can be developed regarding what might be driving NPS. Additional quantitative measures can then be collected that either confirm or refute the original hypothesis and uncover what is truly driving changes in NPS. It is imperative that the qualitative research used to generate hypotheses be followed up by quantitative research since qualitative research is not projectable (for a variety of reasons). If you have questions about how NPS can benefit your association, please contact Jeff Adler at or jadler@verisconsulting.com. Jeff is Managing Director, Primary Market Research Practice Lead of Centrac A Division of Veris Consulting. He was previously Founder of Centrac DC, a boutique research firm founded in 1997, with expertise in traditional market research methods and in the development and deployment of Emerging Market Research Techniques. Page 5

6 Veris Consulting specializes in providing outsourced accounting and financial management, benchmarking and membership surveys and full service research for associations. Our dedicated, highly experienced staff brings extensive in-the-trenches expertise delivered to over 200 associations. Full Service Research Quantitative Research (surveys, panels & advanced analysis) Qualitative Research (in-depth interviews, focus groups & online forums) Mobile Research (quantitative, qualitative & ethnography) Social Media Research (audits & monitoring) HEADQUARTERS Plaza America Drive, Suite 300, Reston, VA CONTACT Jeffrey C. Adler, PRC Managing Director Primary Market Research Practice Lead Veris Consulting Inc. All rights reserved. Article requires written permission to reproduce in any form.