What is the probability of existing customers referring the product to potential customers? This is the million dollar question which every CEO and Product owner want to know. Net Promoter Score (NPS) provides the answer to this question. The net promoter score (NPS) helps to monitor and control stakeholder satisfaction levels. If a product or service creates lots of happy customers it is really good. Additional referrals from happy customers is the way to grow customer base.
NPS is a good indicator of the likelihood of new customer creation through referrals. In project management, NPS can be used to measure stakeholder satisfaction.
How to calculate the Net Promoter Score?
It is very simple.
- Conduct a survey with the question ‘Will you recommend this product / service to others?’
- Here is the scale;
- Promoter score 9 – 10 are loyal enthusiasts (Promoters)
- A score within the range of 7 to 8 indicates satisfied customers who are not very enthusiastic
- Those giving a score between 0 – 6 are unhappy customers (detractors)
NPS formula
Net Promoter Score (NPS) = % of promoters – % of detractors
NPS can be within the range -100 to +100.
If the product quality is very bad then NPS can be negative and at the same very high product quality will lead to positive NPS
Application of Net Promoter Score in Stakeholder management
From the project management context, stakeholders are the ones, who is affected positively or negatively by doing or by delaying a project. Project stakeholders can be classified based on their power and influence.
It is very important to manage the powerful stakeholders and the ones who have lot of interest in the project outcomes. Maintaining a high NPS of all the key stakeholders must be the top priority of the project manager and the project management team.
Application of NPS in product release strategy
In his book ‘crossing the chasm‘, Geoffrey More classifies the user groups into;
- Innovators
- Early adopters
- Early majority
- Laggards
High NPS from the innovators captures early adopters. The early adopters net promoter score determines determines the early majority, and the laggards follow suit.