Last updated Jun 13 2020
The Net Promoter System ®
In the Net Promoter world, the ‘S’ in NPS can stand for two different (but related) things: Net Promoter Score and Net Promoter System.
The Net Promoter System, according to Bain & Company, is a business philosophy that commits to earning the loyalty of customers and employees alike.
We covered the score and how to analyze it separately; here we take a look at the System and its three main components—leadership commitment, the shared use of a single metric, and a dedication to iterative improvement.
A brief history of Net Promoter Score
Back in 2003, Fred Reichheld of Bain & Company invented the Net Promoter Score metric and introduced it to the world through his best-selling book The Ultimate Question: Driving Good Profits and True Growth.
Over the years, thousands of leading brands such as Apple, Intuit, G.E., and American Express began using NPS (the score) to measure customer loyalty and engagement. Many joined Bain’s NPS Loyalty Forum, where they pooled their knowledge; over time, the community came to refer to these practices as the Net Promoter System.
“The Net Promoter System touches every part of the organization, including finance, operations, marketing, product design, human resources, and information technology. It reaches from the CEO and board all the way to the frontline employees who serve customers.”
Fred Reichheld - Author, The Ultimate Question 2.0
The 3 essential components of the Net Promoter System
The Net Promoter System is completely open-source, so anyone can take its fundamental blocks and use them to build a better company. However, in The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World, Reichheld declares there are at least 3 components that must be used:
1. Strong, sustained leadership commitment
Many CEOs talk about improving customer experience but behave in ways that undermine their stated mission. Rather than focusing solely on revenue and profits, leadership and executive teams must signal to employees that customer engagement and loyalty are mission-critical.
Here’s what that might look like across different departments:
Customer Support (CS)
The traditional way: an e-commerce company evaluates its CS reps solely on the number of calls they complete per hour.
The problem? Reps rush through their calls, which irritates customers and might leave their problems unresolved.
The NPS way: when gathering feedback after a CS call, follow the NPS question by asking customers the extent to which their latest CS experience influenced their rating. If the support call influenced their score (positively or negatively), ask them to explain further. This incentivizes CS reps to solve problems rather than rush through calls, and highlights areas for improvement.
The traditional way: a Software as a Service (SaaS) company is concerned about retention rate, so pressure is put on several departments to solve the issue.
The problem? A non-customer-centric Product team could well try to retain clients by burying the ‘Cancel’ link beneath a sea of information. The cancel rate drops, but customers are frustrated and badmouth the company.
The NPS way: use NPS to determine how engaged customers are at key points throughout the customer journey, including after they’ve converted, then regularly report the results to the Product team. This encourages Product Development to consider and improve the customer experience as a whole—and a good, reliable customer experience creates true loyalty.
The traditional way: an enterprise software company incentivizes Sales reps on revenue alone.
The problem? When salespeople know their job is on the line, they may be tempted to engage in shady practices for short-term gain.
The NPS way: consider Net Promoter Score when evaluating sales performance. Happy customers mean greater profits in the long run.
2. Use NPS as your reliable metric
Successful companies around the world use the Net Promoter Score to measure customer loyalty and engagement. There are plenty of other metrics out there, but many of them are proprietary systems shrouded in mystery—which means they haven’t been widely tested and scrutinized.
When you use Net Promoter Score as your metric, you can:
- Figure out where you stand in your industry
- Give your managers and colleagues a straightforward case for data-driven changes
- Observe how the changes you make play out over time
3. Create a system for improvement based on what you learn
Identifying your NPS is only meaningful if it leads to positive change. The Net Promoter System helps you address problems directly, train employees, and revise products and policies where it makes sense.
NPS companies regularly cycle through three phases that Reichheld describes as the inner loop, the huddle, and the outer loop.
Inner loop: once you’ve gathered feedback, you can use this information to train individual employees and help them better serve customers. Managers can also reach out to unhappy customers to let them discuss their experience and, wherever possible, make things right.
Huddle: these short, interactive meetings allow teams to brainstorm solutions, address customer escalations, and confirm their mutual commitment to customer centricity. The huddles connect the inner and outer loops.
Outer loop: this step involves root-cause analysis and structural problem-solving. It’s also where management implements structural improvements (e.g., changes to products, policy, and messaging) and evaluates their effectiveness.
Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.