If you run a business with multiple locations, how do you know if one of your sites has started to create a poor customer experience? Since you can't be in every place at once, you may not know until it's too late. And you probably won't be finding out from your employees. By the time customers at that location have started to complain loudly enough for you to notice, your other locations will start to suffer, too.
Wouldn't it be better to find out if a location has started to slip ahead of time?
You can, by using Net Promoter Score (NPS). In this post, I'll show you how. But first, a quick refresher on NPS and what it's intended to do.
What is the Net Promoter Score (NPS)?
The NPS is a system of measuring customer loyalty. It was developed by a business consultant named Fred Reichheld, whose research indicated that you can measure customer satisfaction by asking one question: how likely are you to recommend our company to a friend or colleague?
To answer, a customer simply responds with a number from zero to ten – zero meaning "not likely at all" and ten meaning "extremely likely".
Each score is placed in one of three categories: promoters, passives and detractors.
- Promoters are those who respond with a rating of 9 or 10.
- Passives are those responding with a rating of 7 or 8.
- Detractors are those who answer 0-6.
To calculate NPS, subtract the percentage of detractors from the percentage of promoters (passives do not affect the score).
How To Interpret NPS
It doesn't take a PhD in statistics to understand NPS: the higher the number the better. A positive number means that you have more promoters than detractors; a negative score indicates that you have more detractors.
But there are a couple things to keep in mind. First of all, don't be satisfied just because your NPS score is positive: world-class brand like Apple, Amazon, and Netflix enjoy score of 60-70+. There's always room for improvement.
Secondly, NPS is most useful when compared to other companies in your industry. Your industry might be one that naturally sees higher or lower NPS results based on factors outside your control. Just because you have a solid NPS doesn't mean your competitors don't rank even higher. For a great example of this, check out this infographic from Alignable that compares services used by small-to-medium businesses.
NPS Should Tell You More Than Just a Number
Businesses conducting NPS surveys usually ask a simple follow-up question: why did you give us that score? Make sure you do the same.
Finding out why your promoters love your businesses is gold. You'll quickly learn if there's any valuable information you're leaving out of your marketing. And you'll be better informed on what aspects of your business to improve even further.
Just as valuable is the feedback from your detractors. Was an employee rude? The bread stale? The restrooms dirty? This is your best chance of fixing a problem while it's still contained.
Most importantly, your NPS will give you insight in to whether or not your company is fit for growth. If your score is low (compare yours with others in your industry), you've got work to do before you should focus on expansion.
Keep in mind that when you have a low NPS, a gain of a few points won't always translate into improvements of other business metrics. In many cases, there is an NPS "threshold" that you have to hit first - and until you do, don't expect to see changes to your bottom line. Understanding the presence of this threshold is a good way of setting the right expectations as you attempt to increase your score. For more background on how to set the right NPS threshold, take a look at these insights from Carlson Restaurants.
4 Ways Multi-Location Companies Can Take Advantage of NPS
While a multi-location business could simply take an aggregate NPS score across all of its sites, that approach is of limited value. Here are four ways to get additional insights:
1. Learn from your top-performers
Given enough locations, you'll probably see some outliers. For those locations that have exceptionally high scores, learn what they are doing differently. Maybe a location has discovered a great way to please customers that your corporate team isn't aware of. This is perfect way to find out.
2. Use NPS to measure the outcome of tests
NPS can be a great way to test the effectiveness of marketing campaigns, new product offerings, or operational changes. By measuring NPS before and after a test in a defined and controlled test market, you'll have a better idea of how these tests will affect customer satisfaction and referrals over the long term.
3. Pay attention only to your promoters
Some businesses may find it more useful to only look at the feedback of its promoters. This allows them to focus on the aspects of the business that keep the most valuable customers coming back. This approach may or may not make sense for your own business, but here's why Enterprise Rent-A-Car chose this path:
"...the company counted only the customers who gave the experience the highest possible rating. That narrow focus on enthusiastic customers surprised the CEOs in the room. What about the rest of Enterprise’s customers?... By concentrating solely on those most enthusiastic about their rental experience, the company could focus on a key driver of profitable growth: customers who not only return to rent again but also recommend Enterprise to their friends."
4. Follow up on locations that fall below an NPS "floor"
Maybe you're concerned more about damage prevention. If that's the case, set an NPS "floor" – a number that signifies an at-risk location. Once a location's NPS falls below that floor, focus your efforts on finding and fixing the problem before it gets out of hand.
Avoid The Trap of Oversimplifying NPS
How, when, and where you ask customers to provide NPS feedback could dramatically impact the results. Before you start implementing NPS surveys across your locations, consider your company's structure first.
Customer satisfaction is fickle and affected by hundreds of things, especially location. If you send out your NPS survey to one group of customers at your locations in Seattle, you will most likely garner very different results than a group of customers in South Carolina. This type of variance in your customer base can skew your total NPS and leave you with inaccurate insights about your business.
Without considering certain issues such as local culture, region-specific product offerings, geography, local economic conditions and even weather, you may end up gathering misleading data. And if locations aren't consistent about how they collect NPS data in the first place, their results may not even be comparable.
There's no one-size-fits all answer that addresses this, but if you manage a multi-location business, make sure you're really thoughtful about how you structure your data collection before you send out that first survey.
Here are a few more tips to helping your get meaningful data from your NPS efforts:
- Make sure you have enough data to be statistically significant. If you only get 50 responses, and you have 50+ locations, then you need to send your survey out again. Some say that 250 scores are "statistically valid."
- Launch the survey at the right time, place, and frequency. For example, instead of emailing your customers on the same day, you might get more accurate results by parsing out those requests over several weeks.
- Make sure managers and employees understand how customers are asked and why it's important. Having your employees on board with anything customer related is key.
- Make sure you're consistent across all of your locations. Consider all the places you can place the survey - physical surveys, pop-ups on your website after placing an order, within an app, digital touch points in stores, email marketing, etc) - and make sure that each location follows the same practices, when practical.
Have you had experience using NPS with your own multi-location business? If so, we'd love to hear what you've learned. Let us know in the comments.
For further reading, here are some additional NPS resources you might find helpful: