The document discusses the Net Promoter Score (NPS) metric for measuring customer loyalty and satisfaction. NPS is based on asking customers how likely they are to recommend a company to others. It categorizes customers as Promoters, Passives, or Detractors. A company's NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters. Research shows that companies with higher NPS scores experience greater growth rates. The document provides examples of how various companies use NPS and statistical analysis to improve customer experience and drive business growth.

2. • The Net Promoter® Score (NPS) metric is based on recent research which
suggested that the likelihood of consumers to recommend a company to their
friends and colleagues is a predictive measure of loyalty
• According to a recent Harvard Business Review study, guest loyalty and
satisfaction is about much more than repeat purchases. A guest who buys again
and again from the same company may not necessarily be loyal to that company,
but may instead be trapped by inertia, indifference, or exit barriers erected by the
company or circumstances
• Conversely, a loyal guest may not make frequent repeat purchases, because of a
reduced need for a product or service
Net Promoter Score… Overview

3. Net Promoter Score®
(NPS®
)
• A powerful discipline to measure and manage guest loyalty
• Means for gauging performance
• Establishing accountability
• Prioritizing focus areas
• Theory that ‘willingness to recommend’ is a strong indicator of loyalty and
growth…”because when guests recommend you, they’re putting their reputations
on the line. And they’ll take that risk only if they’re intensely loyal”*
• Research shows strong correlation between a company’s growth rate and the
percentage of its guests who are ‘promoters’
“In fact, the only path to profitable growth may lie in a company’s ability to get its
loyal guests to become, in effect, its marketing department”
(Fred Riechheld)
*“Net Promoter®
is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.”
The Discipline…

4. "Net Promoter Score" is the percentage of Promoters minus the
percentage of Detractors
• Promoters are loyal enthusiasts who will keep buying and refer others
• Passives are satisfied but unenthusiastic guests
• Detractors are unhappy guests who can damage your brand and impede growth through
negative word - of – mouth
• WE ASK: Based on your overall experience with XYZ Company, how likely are you to
recommend our services to friends and colleagues? Please reply using the 0-10 point scale below,
where ' 0 ' means 'not at all likely to recommend' and ' 10 ' means 'extremely likely to recommend'.
The Measure…

5. Calculating NPS …
A Net Promoter® Score can be calculated by subtracting
the percentage of Detractors from the percentage of
Promoters
Ultimately, the theory behind the Net Promoter® Score metric is that a company
will experience long-term and sustainable growth only if the percentage of
Promoters is greater than the percentage of Detractors

6. NPS & Growth …
• Harvard Business Review research suggests that, in most industries,
there is a strong correlation between a company’s growth rate and the
percentage of guests who are Promoters – that is, those who say they
are extremely likely to recommend a company to a friend or colleague
• For most companies in most industries, getting guests enthusiastic enough to recommend a
company appears to be crucial to growth. It is worth noting that the size of a company has no
apparent relationship to its Net Promoter® Score
• Companies with the most enthusiastic guest referrals, such as eBay and Amazon.com,
received Net Promoter® Scores of 50% to more than 80%. The average firm, on the other
hand, has an NPS of only 5% to 10%
Harvard Business Review research has surveyed several dozen industries around the
world and found that the NPS leader on average has been growing at more than 2.5
times the rate of competitors

7. Voice of Customer
• In a hospitality industry, guest loyalty and references are crucial – NPS is key to
measuring them. This underscores the strategy to “grow with existing guests”
• VOC process helps drive immediate actions and create focus on improvement areas
to increase guest Loyalty, improve guest experience and drive profitable growth
• NPS can be measured at two levels to manage the total health of guest
relationships, driving change across leadership and operational teams:
– Top management level for ‘strategic’ insight &
– Executive level for more ‘operational’ insight
• VOC tool is not just a guest survey, but a management tool that allows to drive
‘insight to impact’, stakeholder by stakeholder and engaging all levels from
frontline to Leadership
Cultivating Intensely Loyal guests for Business Growth
The Practice…

8. Questions …
• Questions to be framed by a group of experts / consultants keeping in mind the
nature of the industry
• A series of satisfaction questions are posed to each participant
• The final question in every survey is always, “On an overall basis, how satisfied are
you with our company?”, which is the single most reliable metric for reflecting
guest satisfaction, and which have been able to quantify as the single most
accurate predictor of future revenue behavior
• Questions can be framed on :
• Over all performance
• Performance on specific areas
Sample Questionnaire
Sample Qs

9. Attractive aspects of NPS …
• It is simple
• Easy to understand
• Can be disseminated across an organization with relative ease
• If a high percentage of guests indicate an unhesitating propensity to recommend a
company or product, that company’s sales force enjoys a built-in extension of its
efforts

10. Loyalty Shift Analysis

11. Movement of Promoters
Passive
Detractor
Promoter
Movement of Passives Movement of detractors
Loyalty Shift…
• Survey to be conducted twice a year (Half Yearly)
• Compare the results between the two surveys
• Note the movement i.e. shift of loyalty

12. No. of
respondents :xxxxx
Critical Improvement Areas (Detractor
remained Detractor) n= xx
Areas of consistency (Promoter remains
Promoter) n= xx
Real areas of Strengths (Detractor to
Promoter) n= xx
Valuable Vulnerable (Promoter has
turned into a Detractor) n=xx
Critical to address Leveragable Strengths
Loyalty Shift…

13. • The Gap Analysis Framework outlines a comparison of
what consumers find important against the company’s
own performance. This framework was developed to
identify opportunities; it prioritizes key areas to defend
and grow NPS
Gap Analysis Framework …

14. Regression:
• A regression analysis assesses whether one variable can be predicted by another. Multiple
regression generalizes this to ask whether one variable can be predicted by several others.
• For example, multiple regression allows us to answer the question “what are the best predictors of
high ‘likely to recommend’ ratings?”
ANOVA:
• An Analysis of Variance (ANOVA) assesses whether responses from two or more groups differ
significantly from one another on a certain dependent variable.
• For example, an ANOVA allows us to answer the question “do guests who respond to key
statements in a certain way give higher ‘likely to recommend’ ratings?”
Correlation:
• A Correlation analysis assesses the extent to which two variables are related.
• For example, a correlation analysis allows us to answer the question “are higher ratings on key
statements associated with higher ‘likely to recommend’ ratings?”
Chi-Square Test:
• A Chi-Square Test is one type of correlation analysis, which examines the relationship between
variables when categorical data is used. This allows us to examine whether something happened
more or less likely than chance would predict.
• For example, “are guests who give ‘Outstanding’ ratings on key statements more likely than chance
would predict to be Promoters?”
Statistical Analysis …

15. Net Promoter Operating Model …
The first critical element at the core of the program is the creation of a
guest centric culture, or DNA
Incorporating all six elements of this model will ensure greater
Net Promoter program success

16. =
• General Electric (GE) uses Net Promoter Score to drive process excellence
for its customers, and plans to use NPS as a metric to decide the
compensation of its leaders
• Procter and Gamble uses Net Promoter Scores to measure the health of
its brands
• Allianz uses Net Promoter Scores to help it achieve what it calls
"customer-centricity“
• Other companies using NPS include American Express, Concentra Medical
Centers, Virgin Media, BearingPoint, The Carphone Warehouse and
Intuit, Apple, ebay, Amazon, Cisco, USAA, Harley Davidson
• Verizon Wireless also uses NPS in all business channels including their call
centers and retail stores
Some Industry Examples …

17. • GE has long engaged in detailed VOC surveying to understand what works and
what doesn't for customers
• Adopted the Net Promoter Score® methodology to understand and drive Customer
Loyalty as a core growth initiative
• They ask the customers a simple question about their experience with GE and their
propensity to recommend services
• They have gathered a rich database of knowledge about customers and the
business, which, combined with Lean Six Sigma methodologies have resulted in
significant growth throughout the businesses
• A key part of understanding the customers is managing and actioning their
complaints
• A centralized customer complaints system is part of the VOC program, including a
process to ensure timely intervention when a customer is unhappy
The GE experience …

18. THANK YOU
An organization should achieve a Net Promoter Score of about +70%*
*As per Harvard Business Review Research
Prepared by
Snigdha Majumder
Head of the Department Lean Six Sigma
ITC Hotels Mumbai