The NPS Index ( Net Promoter Score ) is an index of determination of customer adherence to a product or company (readiness index to recommend), used to assess readiness for repeat purchases. It is one of the main indices for measuring customer loyalty.
Measuring the NPS loyalty index involves several steps.
- Consumers are invited to answer the question “What is the likelihood that you will recommend a company / product / brand to your friends / acquaintances / colleagues?” On a 10-point scale, where 0 corresponds to the answer “I will not recommend it in any case”, and 10 - “ I will definitely recommend it. ”
- Based on the assessments received, all consumers are divided into 3 groups: 9-10 points - supporters (promoters) of the product / brand, 7-8 points - neutral consumers, 0-6 points - critics (detractors).
- Directly calculating the NPS index. NPS =% of supporters -% of critics
- To get practical insights from the index, critics and supporters are asked the second NPS question: “Why?” The answers to this question allow companies to determine their most important competitive advantages or the main development areas, based on the opinion of customers.
History
The founder of the method is Frederick Reicheld, who first announced it in the article The One Number You Need to Grow, published in Harvard Business Review [1] in December 2003. In 2006, he published a book entitled The Ultimate Question: Driving Good Profits and True Growth, which is known in the Russian market as The Book of Real Profits and Real Growth (2007). In it, he continued his discussions on the topic of loyalty, profitability and company growth.
In 2001, Reicheld conducted a study in more than 400 companies in America, where the main task was to measure the impact of customer loyalty (measured by NPS) on its growth rate. The main result was the conclusion that the industry average NPS was 16%, but for companies like eBay and Amazon NPS it was 75%. Reicheld does not say that communication is ubiquitous, it is absent altogether in monopolistic markets. However, industries such as passenger transportation, insurance and car rental have become a clear example of the relationship. These companies are service companies, where customer satisfaction and loyalty depend on the level of customer service.
Many companies have become adherents of this technology, including GE, Allianz, P&G, Intuit, Apple, American Express, Philips, eBay, Amazon, etc. In the Russian market, such technology is used by companies such as BestDoctor, Rostelecom, Ozon, AlfaStrakhovanie Insurance Group, Red Cube, Megafon North-West, MTS, 1C-Bitrix, ROSNO, MIAN, TELE2, Home Credit Bank, QIWI and others. [2]
Research on the Russian market
Research using this technology is carried out by many research agencies in Russia and abroad.
Evaluation of customer loyalty using the NPS index can be used in various industries: in the IT, financial, construction, etc. In Russia, the NPS index is actively used by banks and insurance companies in their work.
In the banking sector, this approach to evaluating loyalty is especially common. Some companies themselves take measurements, for example, using a feedback tablet. There are organizations that prefer to hire independent experts to conduct the assessment. NPS in the banking market can be calculated both for the main bank (which it is determined by the customers themselves), and for all banks whose services consumers use. In 2016, a survey of users of Russian banks was conducted in Russia, which showed that the average bank NPS was 44 points for the main bank, and NPS was significantly lower for all banks used by Russian customers - 30 points ( the survey was conducted by the NAFI Analytical Center).
Notes
- ↑ Reichheld, Frederick F. One Number You Need to Grow // Harvard Business Review : magazine. - 2003. - December.
- ↑ LOYALTY.INFO. LOYALTY.info - Effective loyalty programs - How to attract and retain a customer (inaccessible link) . www.loyalty.info. Date of treatment September 10, 2015. Archived March 4, 2016.