Net Promoter Score – A concept of Success
Only a happy guest is a good guest
articles July, 2017
What is the Net Promoter Score?
The Net Promoter Score is an index that is used to gauge both customer satisfaction and their willingness to recommend a company’s product.
The idea of the Net Promoter Score is fairly recent and was introduced in 2003 by Fred Reichheld in the management magazine “Harvard Business Review” as “One number you need to grow”. Prior to publishing, Reichheld had developed the concept together with the management consultancies “Bain & Company” and “Satmetrix”.
The resulting tasks and consequences may be complex and varied, but, ultimately, the Net Promoter Score is based on one simple question:
“On a scale of 1-10, how likely is it that a customer will recommend my company/hotel to a friend or colleague?”
Calculating the Net Promoter Score in the hotel business
Based on a review of 1-10, guests are divided into three categories: Detractors, Passives and Promoters.
- Detractors: Guests who give a review of 6 points or less fall into this category. They are not too impressed with the hotel and are not likely to become regular guests. Critics may also damage the reputation of your establishment through negative word-of-mouth advertising.
- Passives: Neutrals give reviews of 7 or 8 points. They are reasonably satisfied with the service received, but could easily switch to one of your competitors if they perceive an advantage to booking with them. It can be assumed that this type of guest has neither a negative nor a positive influence on other customers’ purchasing decisions.
- Promoters: Guests who love your establishment and give it a score of 9 or 10 fall into this category. These customers are true cash cows; not only are they of higher value than your average guest, they are also the best advocates for your establishment. Great recommendations are the best form of free advertising!
The Net Promoter Score is calculated from the difference between Promoters and Detractors:
NPS = Promoters (in %) – Detractors (in %)
An example: Your hotel is reviewed positively (9 or 10 points) by 80% of your guests. 10% of the surveyed give it a neutral score (7 or 8 points) and 10% give it a negative score (6 or fewer points).
The Detractors are substracted from the Promoters whilst the Passives are ignored in the calculation.
80 – 10 = 70
In this example, the Net Promoter Score for your establishment is 70.
How to use the Net Promoter Score
Due to its simplicity, the Net Promoter Score is an attractive tool and can be used practically across the board in all types of companies. A simple email survey with just the one question mentioned above will be enough to gather relevant data. If you wish, an open text field for the guest to go into more detail about their review can be placed after the question.
The fact that only one question is posed usually results in a high response rate. This is an easy way to collect guest-centred feedback from the guest. The collected data can then be used to calculate the Net Promoter Score and get an impression of how satisfied your guests are. This, in turn, can give you new insights into your business or help discover problem areas. As the question is the same in all surveys, it is simple to compare the results across the board. This also facilitates market positioning.
Criticism of the Net Promoter Score
The simplicity of the idea is also what is often seen as its largest drawback. Despite statements to the contrary by the developers of the concept, many companies fall short of fully utilising the idea and forgot further analysis of the figures. This is despite the fact that Fred Reichheld made it clear in 2003 that extensive investigation of the causes leading to the score should be done in order to find out where the reasons for guest dissatisfaction may lie and what should be done about it to raise the amount of recommendations.
A further point of criticism that is often raised is that the results are not cross-cultural. German response behaviour is different to response behaviour in the US and UK which were the two countries studied.
Furthermore, it is continuously discussed in scientific debate how and why the Net Promoter Score’s single question should be more suitable than other questions (ie: How satisfied were you? Will you return?).
From the Net Promoter Score to the Net Promoter System
Despite the criticism, NPS is now well established in today’s business environment. The idea has, however, been developed further since its first inception. Nowadays, there is often talk of the Net Promoter System instead of the Net Promoter Score. The former is often used together with Customer Experience Management (CEM) to draw qualitative conclusions from the solely quantitative data of the survey. This means that Detractors can be identified more easily and subsequently contacted to find out the reason for the negative review. The problem can then be remedied. Promoters can also be targeted to encourage other guests and used to improve the establishment.
An all-in-one solution – Customer Alliance’s Net Promoter System
If you’re being absolutely honest, how do you stand in your efforts to satisfy your guests? Do you take every opportinity to improve your reputation by using modern tools such as NPS or CEM? Probably not. We understand that it is extremely difficult and time-consuming for small hotels to work on all fronts at all times.
At Customer Alliance, we know the hotel business inside out and are aware of where you need help as well as where it makes sense to automate your business. We have been assisting hoteliers to establish themselves in the digital world for many years.
Our user-friendly solution offer you the opportunity to easily implement an effective Net Promoter System. All you have to do is ask your guests how likely they are to recommend you on a scale of 1-10 and then calculate your Net Promoter Score. In addition, you can improve your quality management by using our easy analysis function for causal investigation. The semantic analysis allows you to search the reviews for key topics such as breakfast or room service and saves countless hours of manual work.
Find out how Customer Alliance can help you improve your Net Promoter Score. Talk to us. Anytime.