Research: How & Why To Properly Use Net Promotor Scores

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The most powerful research methodology sweeping credit unions today is based on a simple survey question: How likely is it that you would recommend ABC Credit Union to a friend or family member? Survey participants rate their responses on a scale from 0 to 10. Nines and 10s are “promoters” of the organization, 0-6 scores are “detractors,” and responses in between are disregarded.

The Net Promoter Score (NPS) is expressed as a percentage, which equals the percentage of promoters minus the percentage of detractors. The NPS measures member advocacy and thus the likelihood of organizational growth.

While a high NPS is a source of pride and a low score is cause for concern, it’s critical to look beyond the numbers. For a richer picture, segment the responses by region, branches, demographics, profitability, services per household and relationship tiers. Then, examine the drivers and consistent themes behind the ratings.

NPS research has many applications besides growing an organization. For example, understanding the drivers behind member promotion clarifies your brand identity, allowing you to leverage strengths for more accurate positioning in the market and more targeted marketing. Knowing who one’s raving fans are also helps with the identification of ambassadors, board members and volunteers. Moreover, when members are asked to rate the institution versus competitors, substitutes and alternatives, the NPS leads to a better understanding of the competitive environment.

For a complete picture, use NPS research in conjunction with transaction surveys. Have members rate their satisfaction with their most recent experience along with overall satisfaction. Together, NPS and transaction research can identify issues and challenges for the purpose of implementing changes. Tested with further NPS research, these changes will hopefully manifest themselves in higher scores and a rising bottom line.

Mike Anstead is Senior Vice President of Member Research. He can be reached at (949) 833-6901 or by email at (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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