Economics/Business

Net promoter score definition/advantages/How to calculate/evaluate results

The NPS, Net Promoter Score, is the metric used to measure customer satisfaction and the probability of them referring that product, company or service to a friend or family member. In HR, the best application is ENPS. Net promoter score definition

Do you know what NPS is? As a customer, for sure, you have already answered the following question at some point : “On a scale of 0 to 10, how much would you recommend our company?”. This simple question is the basis for what we call the Net Promoter Score (NPS), which is nothing more than a metric for measuring customer satisfaction for a particular brand.

In addition, NPS can be a powerful tool for the Human Resources sector within the organizational environment , simply replacing the survey on consumer satisfaction with the quality of the experience of employees and candidates for a vacancy in the company. Net promoter score definition

After all, a motivated and engaged employee, as well as a customer, becomes a brand promoter, by recommending the company’s product or service to friends and family, in addition to expressing to professional colleagues, in their networks, how the organization is a great place to work and develop professionally. Thus, your business will attract the best talent in the market.

Interested in knowing more about what NPS is, how to calculate and use it in your organization’s HR? Keep reading until the end and understand everything about it!

What is NPS and what is it for?

The Net Promoter Score (NPS) has become one of the main methodologies used to measure the satisfaction of a company’s customers, regardless of its segment. 

Created in the early 2000s by business strategist and speaker Fred Reichheld, this metric can be used both to identify potential brand detractors and to measure consumers willing to promote and refer the company to friends and family.

In this sense, promoting consumers reduce the cost of acquiring new customers , in addition to facilitating service , since they know and trust the brand, increasing empathy in the most diverse situations that can occur between the business and the customer. Net promoter score definition

Otherwise, detractors, who are consumers who had a negative experience with the company, put the organization’s image in the market at risk by badmouthing the brand to friends and family, in addition to even suggesting it on consumer experience sites and on social networks that people do not hire your service or purchase your product.

Finally, there are consumers considered neutral, who occasionally consume the company’s product or service, but have not yet had a differentiated experience that has made them loyal to the brand.

What are the advantages of measuring NPS in the company?

Currently, for a company to remain in the market, it is essential to understand how the customer journey is going from the first contact with the organization to after-sales support. 

This is because, in an increasingly competitive market, in which e-commerce allows the customer to purchase a product or service with just one “click”, providing a differentiated experience is the key to obtaining more than customers, and then making it the brand promoters. 

According to Philip Kotler, considered the father of digital marketing: “ the amount spent to attract a new customer can be five to seven times greater than the cost to maintain proximity with an old customer ”.

Still, there are other benefits in understanding what NPS is and knowing how to use it in your company. So, let’s introduce some of them. Net promoter score definition

simple and fast

One of the main advantages of this methodology is that, through a single question, you get all the answers to measure customer satisfaction. Still, the NPS is an easy metric to calculate, having in its result a quantifiable value.

Comparable

One of the most competitive strategies for a company to remain in the market is to know how it is seen in relation to its competitors. 

Thus, managers and leaders can create actions that differentiate the organization from others that operate in the same segment.

So, since most companies use this metric, there will always be solid data to compare their customers’ satisfaction against their competitors’ NPS.

Parameter recognized in the market

NPS is a standardized and proven method of measuring customer satisfaction levels. 

Therefore, the methodology gained trust and has been used by brands that are a reference in the market, such as American Express, Apple, Magazine Luiza, among others.

How to calculate NPS?

Now that you understand what NPS is and its advantages of applying it in the company, also understand how simple it is to measure it. The calculation is as follows:

NPS = % promoting customers – % detracting customers

As an example, imagine a scenario with 100 responses collected. Among them, 60 were responses 9 or 10, that is, they are from promoting customers and 5 were evaluations from 0 to 6.

So, the calculation looks like this:

NPS = 60 – 5

So the NPS will be = 55.

To know if this is a positive or negative NPS, we will explain how to evaluate the results in the next topic. Keep reading! Net promoter score definition

How to evaluate NPS results?

To measure NPS survey results, there are basically four ranking zones. See how it works!

Zone of Excellence: score between 75 and 100

If your company has reached this score, know that it certainly provides an excellent experience to your customers , making them become brand promoters, recommending your product or service to friends, family and on social networks. 

Quality Zone: score between 50 and 74

Here, customers found positive points in their journey, but they also saw aspects that they did not like, harming the experience. 

Therefore, when obtaining this score, the company needs to analyze its persona and understand in which aspects it needs to improve to provide a better perception of the customer in front of the brand.

Enhancement Zone: score between 0 and 49

At this level of NPS, the company needs to pay attention to the feedback that customers have been offering about their purchase and after-sales journey. Net promoter score definition

Soon after, managers and leaders must develop and put into practice actions that improve consumer satisfaction so that they become brand promoters once and for all.

Critical Zone: score between -100 and -1

This is a warning sign showing that the relationship between business and consumer is definitely not going well. 

Thus, in the critical zone, the company will be creating brand detractors, that is, dissatisfied customers who, in addition to complaining, will not recommend its brand and may even speak badly about it to their circle of friends. 

At this point, the company needs to take urgent measures to reverse the situation, causing the customer to review its positioning and return to consume its product or service. 

ENPS: the extension of NPS applied to people management

Thinking about the organizational environment, HR adapted the NPS methodology to measure employee engagement and satisfaction . 

Thus, the ENPS (Employee Net Promoter Score) emerged, which is a metric that measures whether employees see the company as a good place to work and how loyal employees are to it. 

Here, the question becomes: “On a scale of 0 to 10, how likely are you to recommend our company to other people?”. Net promoter score definition

Improved employee experience

Every good HR professional knows that human capital is the company’s most valuable asset and that the new professional in the market seeks to work in an organization that motivates and develops him as a professional and individual, providing what we call the Employee Experience . 

Thus, the best employee experience occurs from their first contact with the organization, even before recruitment and selection . At that time, you might think, how is this possible?

So, when the employee is aligned with the company’s values ​​and performs activities that are in accordance with his behavioral profile, he ends up advertising the brand on his corporate social networks, such as LinkedIn.

In this powerful network of networking, the employee can publish articles, videos and photos of the organizational environment, making friends and professional colleagues also want to work in your company because they identify with your culture . 

This is what we call Employer Branding , a concept that refers to a set of techniques aimed at creating a positive image of the company in the market. Net promoter score definition

Therefore, with the ENPS results in hand, HR, together with managers and leaders, can identify if the organizational climate is good and if the employees have the cultural fit of the company . 

Thus, it is possible to quantify the employee’s experience with the brand and assertively develop improvement actions and strategies, if necessary. In this way, the company also invests in talent retention .

Also, thanks to the advancement of technology in HR , the sector has several software that assist in the survey of ENPS within the company, providing some additional tools for measuring satisfaction, such as research on organizational climate and engagement. 

Now that you have definitively understood what NPS is, you have seen how important it is not only in the development of marketing strategies with consumers, but that, when adapted, it can also be an ally of HR in understanding the level of employee satisfaction with the company? Net promoter score definition

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button