Is There Such a Thing as NPS for Social Media?
By Janet Gerhard Founder, Hospitality Gal, LLC | February 16, 2014
One of the major customer experience vendors in the hospitality space was recently conducting a study on the "NPS of NPS." At the time of this writing the results were not known. The survey was brief and asked if you would recommend the use of Net Promoter Score (NPS) on its standard 0 to 10-point scale. Fred Reichheld, a partner at Bain & Company, introduced the concept of NPS in a 2003 Harvard Business Review article in which he proclaimed that the simple measure of consumers' likelihood to recommend the company's products or services was an accurate predictor of revenue growth. However, there's growing debate about the validity of the NPS as many believe it is too simple and too good to be true. A wealth of information and its evolution from Net Promoter Score to its current form of Net Promoter System can be found at http://www.netpromotersystem.com/about/.
For those of you who may not know, here's how NPS works: When surveying guests, hotels include a question asking about the likelihood to recommend your property to their friends or colleagues using an 11-point scale (0-10). Based on their response, customers are broken into three distinct buckets:
- Detractors (0-6)
- Passives (7-8)
- Promoters (9-10)
Promoters are described as your loyal enthusiasts who fuel growth through repeat purchase and referring others. Passives are merely satisfied and vulnerable to competitive offerings. Your Detractors are where the real problems lie. These scores are categorized as your unhappy customers who could be hurting your brand through negative word-of-mouth. To calculate NPS, you must take the percentage of customers who are Promoters and subtract the percentage who are Detractors. Clearly a positive score is good and the more positive the better.
We've seen NPS gaining in popularity as hotel brands are looking to better tie loyalty measures to guest behavior and growth. Without question, the attraction to NPS for many is its simplicity. Are the raves outnumbering the rants? An added bonus is the opportunity to benchmark results against competitors as well other service industries and leaders. However, unless you are buying the Satmetrix annual NPS benchmark report, which allows you to compare your score in a variety of industries, the fallacy in this thinking is that although many companies are purported to measure NPS, they often do so with their own tweaks.
For example, Andy Taylor, the CEO of Enterprise Rent-A-Car is cited as one of the major influencers of Reichheld's research leading him to NPS as an indicator of growth. Enterprise, however, does not use the net of Promoters minus Detractors. Enterprise focuses squarely on the percentage of Promoters as its internal measure of quality. Other companies ask the likelihood to recommend on a 10-point scale versus an 11-point scale. I have even seen one lodging brand's NPS score used to benchmark a member-advisory company's results. What's unusual there? In working with this particular brand directly, I know they don't use a NPS metric internally so where that number came from is a complete mystery.