The Ultimate Question - Exploring Net Promoter Score

What is Net Promoter Score (NPS)?

The Net Promoter metric was developed by Fred Reicheld at Bain & Company. He found that client likelihood to recommend best correlates with revenue growth across most sectors.

To calculate Net Promoter Score, we first have to ask clients what is sometimes called the ultimate question: “How likely, on a scale of 0 (least) to 10 (most), would you be to recommend us to a friend, colleague or family member?”

Those that score you a 9 or 10 are your promoters. They are delighted with you. They will be evangelists for the company.

A 7 or 8 means they are a passive. You have most likely met their expectations but you have not exceeded them. You have not given them anything to write home about.

If they score you a 6 or less, then they are your detractors. They will actively tell people to avoid interactions with you and your team.

Net Promoter Score focuses on the promoters and the detractors with the following calculation:

Net Promoter Score = %Promoters - %Detractors

Customer Segmentation

However, there is more to the Net Promoter methodology than just the headline number. We can segment clients, for example, using this grid:

We can then make evidence-based business decisions reflecting on the cost and pay-off of, for example, converting more passives to promoters. Moreover, we can explore the true value or otherwise of serving detractors, so-called “insurgents” and “detainees”.

The Four Loyalty Behaviors

Why do we have to stick to such a rigid methodology? Why can we not just ask clients if they are satisfied? What is the obsession with likelihood to recommend? Well, satisfaction just does not appear to be enough. Further research by Bain & Company showed that 80% of defectors - people leaving one provider for another - had reported that they were satisfied. The simple truth is people do not realise they are dissatisfied until a competitor comes along with a better offer.

If building a client base of satisfied customers is not enough, what do we need to do? We need to build a loyal following. But what does it mean to be loyal?

Loyal clients show four key loyalty behaviours. They make a reputational investment in our company by referring their friends. They make 2 key monetary investments by both repeat purchasing the same product or service, and by purchasing other products or services. And, finally, they make a time investment by taking the time to give constructive feedback, for example, via our Net Promoter survey.

This last point, the time investment that loyal clients are willing to make, is an interesting one. It can mean that our survey response rates may act as an indicator of client loyalty. It implies that our survey response rates may act as an indicator of client loyalty.

The chart above shows the satisfaction scores of 12 different vets at a UK veterinary group, plotted against the response rates of those vets. You can see that clients of vets with the highest satisfaction scores were more likely to respond to the postal survey than clients of vets with relatively low satisfaction scores.

It seems clients that are ready to defect may be the least willing to make the time investment necessary to provide their feedback. All of this highlights the importance of proactively collecting feedback and optimising response rates.

Hopefully, it is becoming clear why the likes of Apple, eBay, Starbucks, Shell, HSBC, Intel, the New York Times, Procter & Gamble, PWC and so many others make use of Net Promoter Score. But, is it right for the veterinary sector? My own research into veterinary customer feedback methodologies (conducted in my final year at Cambridge University Veterinary School) and experience applying this methodology while operating veterinary clinics internationally, suggests yes. And I’m not alone in thinking so. Net Promoter is increasingly being deployed by pet care companies, including: PetSmart in the US, Pets at Home in the UK and Greencross in Australia.

Likelihood to recommend drives at the importance of client referrals to business growth through client acquisition. The average business acquires between 30 and 40% of its clients through referral, and veterinary clinics tend to be on the top-end of that range if not beyond it.

We also know from Bain & Company research that likelihood to recommend is strongly negatively correlated with defection. That is to say that unlike customers that are merely satisfied, those that report they are likely to recommend are very unlikely to leave us for a competitor.

We also know that promoters give us a greater “share of wallet” - i.e. they will do more of their pet care spending with your clinic.

Net Promoter Scores also seem to correlate well with financial metrics.

We will go on to discuss how the Ultimate Question engages clients on both the level of their head and their heart. It really all boils down to whether people are willing to put their reputation on the line by recommending our business to key contacts in their social, familial and professional networks. If they are, then we can be confident of long term growth.

EXERCISE: What companies are you a promoter for? Why? What have those companies done to earn your loyalty?

It is highly likely that the companies you mentioned all have one thing in common: they work hard to follow the golden rule. They reinforce customer-centric behaviour in their employees by asking them to treat clients as they would like to be treated. They do so confident in the knowledge that loyal clients and empowered employees correlate strongly to profitable growth.

Studies show that the companies in each industry with the most loyal clients grow 2.6 times faster.

“The Golden Rule is central to everything that we do… the natural result of Golden Rule behaviour is customer loyalty and employee retention.” Colleen Barrett, South West Airlines.

How do we improve our Net Promoter Score? We reflect on whether we have been living up to the Golden Rule. Have we instilled a relentless focus on customer-optimal behaviour in our teams? Or are we hurting the bond with our clients by pursuing quick profits?

The way in which the Ultimate Question engages the clients’ heads and their hearts gives some useful guidance on how to go about improving our scores. We must engage the client rationally by optimising our clinic’s value proposition to ensure it exceeds expectations. This can be in terms of product and service features, quality and price.

However, we must also engage clients on an emotional level by knowing them, appreciating them and listening to them. So many companies talk the talk but not all of them follow through. Approximately 80% of companies believe they provide a superior service experience but only 8% of those companies have clients that agree with them.

You would do well to ensure your clinic is in that 8%.

About the author: Dr Thom Jenkins MRCVS is trained in Net Promoter Score methodology as a Net Promoter Certified Associate. His veterinary business dissertation, conducted at the University of Cambridge, focused on validating NPS as a customer feedback methodology at a UK veterinary clinic group. He has since applied NPS as a relation customer feedback metric at veterinary clinics groups international.