8th October 2019
Understanding how your staff feel about your company is a vital aspect to running a successful business. It provides valuable insight into areas in which you’re doing well or where improvements to processes or your company culture could be made. In this article, we explore the concepts of Net Promoter Score and employee Net Promoter Score to establish how this method can be used to monitor employee engagement.
As time has gone on, companies across the globe have considered, modified and developed a number of varying methods of determining how their customers feel about them.
While these methods have no doubt helped their cultivators to collect data on the attitudes of their consumers in a bid to understand how well (or perhaps even poorly) they are perceived to be doing, they are by no means perfect and cannot be relied upon to provide solid or accurate results.
That’s where Net Promoter Score (NPS®) comes in.
What is NPS®?
The NPS® metric was invented by Fred Reichheld, Bain & Company and Satmetrix and was introduced by Reichheld in his article, One Number You Need to Grow, in Harvard Business Review in 2003.
NPS® is an alternative to more traditional forms of customer satisfaction research, like when a service provider asks you to complete a short survey at the end of the call, for instance.
In basic terms, NPS® is a management tool used by companies to measure the loyalty between a provider* and consumer**, with the provider being a company, employer or any other entity where a consumer role is present.
*Provider: the entity that is asking the question/s on the NPS® survey.
**Consumer: The customer, employee or respondent to the NPS® survey.
How it Works
NPS® is determined by the responses given by consumers to one simple question, scored on a zero-to-ten scale – “How likely would you be to recommend our company/product/service to a friend or colleague?”.
People who respond to the survey with a score of 9 or 10 are Promoters. These people are considered to be most likely to buy more, remain customers for longer and make positive referrals to friends or colleagues.
Respondents who give a score of 0 to 6 are Detractors. They are considered less likely to exhibit these positive, value-creating behaviours.
Anyone who responds to the survey with a score of 7 or 8 is considered to be a Passive and their expected behaviour falls somewhere between that of a Detractor and a Promoter.
How is NPS Calculated?
To calculate the NPS®, you must work out the percentage of Detractors and Promoters from the total number of respondents of the survey and then subtract the percentage of Detractors from the percentage of Promoters.
There are 10 respondents to a survey.
3 are Detractors. (30%)
5 are Passives. (50%)
2 are Promoters. (20%)
To calculate the NPS, use the following equation:
20% – 30% = -10%
The NPS is -10
NB: For the sake of working out an NPS®, Passives are counted towards the total number of respondents in an effort to decrease the percentage of Detractors and Promoters and pushing the net score closer to 0.
What is Considered a Good NPS Score?
An NPS® can range from anything between -100 (this score is representative of every respondent being a Detractor) and +100 (this score is representative of every respondent being a Promoter).
NPS® scores may vary depending on different industries; however, the general consensus is the same – a positive NPS® (one that is higher than zero) is considered to be good. If the score is +50, it’s deemed to be excellent, and any score exceeding +70 is considered to be an exceptional score.
What are the Benefits?
Co-inventor of NPS®, Bain & Company, confidently states that Net Promoter as both a specific metric and as a full Net Promoter System is the most useful and practical method of obtaining consumer satisfaction data for a number of reasons.
The sheer simplicity – NPS® includes just a few questions at the very most, but mostly only involves one generalised ‘likelihood to recommend’ question, which is scored using a simple zero-to-ten scale. This minimises the burden on the customer and means that they are more likely to take part (as opposed to longer, more time-consuming surveys that might put them off).
It’s effortless to use – With the unlimited number of platforms available to us in this ever-developing, technology-driven world, companies are able to conduct their own Net Promoter surveys in a number of ways, including:
- Web application (be it on their website or various social media platforms)
The results of the survey are almost instantaneous, meaning that performance data can be reviewed quickly.
It can be anonymised – The simple design of NPS® allows for total flexibility in the sense that practitioners aren’t bound by specific (or even single) questions. Further from this there is no constraint on how the data should be recorded – i.e. this can be collected anonymously by respondents or practitioners can request basic information to allow them to follow up with respondents at a later date.
Following up is quick and easy – In cases where NPS® practitioners decide not to anonymise their customer satisfaction data, they are able to jump onto feedback as soon as it’s received and contact all Detractors who took part in the survey in order to gain a swift understanding of their concerns and fix them wherever possible. Demonstrating to consumers that they are listening and want to help with their unease will also help towards converting those same respondents into higher scorers the next time around, meaning that the NPS® score will likely increase as time goes on. It’s important to bear in mind that most NPS® practitioners will be inclined to anonymise their data, though; and in circumstances where this is not the case, they are required to make this clear to customers for full transparency.
Allows for growth – Companies can learn from the results and amend or enhance current processes and procedures where necessary, allowing them room to grow where they might not have had the chance to previously.
It’s adaptable – It’s important to keep in mind that NPS® is an open-source method and can be used flexibly across a wide range of industries and business settings. For example:
Apple uses NPS® in its retail stores.
American Express conducts the survey after important servicing calls.
Logitech uses NPS® to assess what customers think of every product they manufacture.
Charles Schwab took on the system in an attempt to turn their business around.
Large, commendable companies such as Apple, Enterprise Rent-A-Car and Phillips have all adopted the NPS® principles within their businesses and have even gone on to adapt the method in their own ways. A lot of practitioners who do this tend to share what they learn and their experiences with NPS® in the Net Promoter System Loyalty Forum.
How can NPS® be used by Employers?
It all sounds pretty intriguing, doesn’t it? The idea that a company, no matter how big or small, is able to use one simple universal question to ascertain what their consumer base thinks of them, their products or their services is mind-blowing – how can anything be that simple?
The practicality of NPS® doesn’t end there, though. It can also be used to understand employees’ engagement and their feelings towards their company.
The sole purpose of companies using Net Promoter System to establish how their customers feel about them is to promote loyalty. However, it’s somewhat difficult to achieve a respectable level of customer loyalty if your employees aren’t loyal and engaged themselves.
The benefits of having happy and engaged employees are tenfold as they provide you with invaluable attributes such as immersing themselves into work with higher levels of productivity and contributing creative and innovative ideas that help to enhance products, processes and services.
Engaged employees provide a better experience for customers simply by being enthusiastic about their work. I know I feel much happier after leaving a shop if the customer advisor has been particularly friendly and helpful, and I would be much more inclined to visit again than I would if I’d have received a poor experience.
Using NPS® to Monitor Employee Engagement
With this in mind, it goes without saying that business leaders would want to do anything they can to ensure they are harnessing the loyalty and enthusiasm needed to really promote their brand; but this can’t be achieved without first understanding how employees currently feel about their employer. Once this has been established, employers can then set to work to improve (or maintain) the level of loyalty staff currently have.
Most companies conduct obligatory 6-12 month staff reviews where they might sit down in a formal setting with their staff to ask a list of questions and give them the opportunity to voice any concerns they may have; however, this simply doesn’t cut it. Even the most confident and upfront of employees can feel uncomfortable in giving a 100% honest review of how they are feeling about their employer – especially if the opinion isn’t all positive. Therefore, providing a platform where staff are able to give their feedback in an entirely anonymous way will generate a more accurate representation of how they really feel.
In light of this, Net Promoter® practitioners have come up with a new approach to monitoring employee engagement based on the Net Promoter System®, aptly named employee Net Promoter Score (eNPS®).
While eNPS® works in the same respect as its archetype, providing a score that represents the general feeling of the employee, the approach can differ slightly from customer NPS®.
Mostly, companies who use the NPS® method settle with one question along the lines of “how likely are you to recommend this company as a place of work on a scale of 0 to 10?” However, when looking at eNPS®, Bain & Company recognises that it may sometimes be of benefit to include additional questions in order to gauge a more accurate evaluation of the shape of employee relationships.
Where this is implemented, further questions should closely reflect the original question itself, varying only slightly. For example:
Overall, how likely are you to recommend this company as a place of work on a scale of 0 to 10?
In terms of company culture, how likely are you to recommend this company as a place of work on a scale of 0 to 10?
In terms of employee benefits, how likely are you to recommend this company as a place of work on a scale of 0 to 10?
The number of questions that are included in the survey will, of course, determine the percentages that you use to find your NPS®. For example:
You have 2 questions in your survey.
There are 10 respondents.
3 are Detractors.
5 are Passives.
2 are Promoters.
4 are Detractors.
3 are Passives.
3 are Promoters.
In total, there are 7 Detractors (35%), 8 Passives (40%) and 5 Promoters (25%).To calculate the NPS, use the following equation:
25% – 35% = 10
The NPS is -10
eNPS® is designed to support ongoing information, coaching, action and continuous improvement and therefore will need to be conducted as an ongoing process. The frequency of these surveys can differ between companies, with some employers asking staff to respond at regular intervals, where others might prefer to promote a steadier stream of input from staff by sending the survey out a couple of months after a new starter joins the company and then on every work anniversary that follows. Some may even opt to send random surveys to staff at different times and calculate the final score at the end of the year.
Net Promoter Systems® support business to:
- Make the person-focused area of a business as transparent as possible.
- Learn, experiment with processes and grow.
- Discover which departments could become potential liabilities and which offer promising best practices.
- Understand which team leaders are doing the best job and which ones need more support and coaching.
- Understand which elements of employee sentiment and engagement most affect customer loyalty so they can identify ways to improve both.
Now that you’ve read all about Net Promoter System®, I’m sure you’re wondering how you can effectively implement eNPS® to gain a better knowledge of how your employees feel about your business.
Well, Staff Squared has got you covered. We are very excited to welcome Pulse to our collection of valuable features, enhancing your HR solution experience to be even more profitable.
Pulse uses a combination of the eNPS® method and intelligent feedback analysis to measure how likely your staff would be to recommend your company as a good place to work, helping you to put efforts in place to improve on or maintain internal processes, procedures and your overall company culture.
By simply setting out a few fast and simple rules in your Pulse space, you can send out an email to all employees on a regular basis asking them to take a moment to share their input on how well they feel you are doing.
The survey is completely anonymous, so your staff can be 100% honest without the worry of whether their feedback will have a negative fallback and will no doubt encourage a larger percentage of responses.
With minimal effort on your employees’ part, they can answer a simple default ‘on a scale of zero to ten’ question with just a couple of clicks.
Each survey runs for 5 days, allowing enough time for optimum responses before the Pulse report shows a break down of your Promoters, Neutrals (Passives) and Detractors.
Creating an eNPS survey with Pulse allows you to stay ahead of the game with your staff to truly understand how they are feeling about the way things are going. Join us in an effort to create a happier and more engaged working environment.
If you would like to learn more about Pulse, contact our Customer Care Team at [email protected] or on 0800 033 7569.
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Clarisse works as the Lead of our Customer Support Team to provide all of our customers with the very best care and guidance when using their HR software.