It took nearly 500 years for accountants to establish global standards for reporting financial information. Luca Pacioli invented double entry book-keeping in 1494, but it was not until the mid 1960s that standards of reporting came into the mainstream. The Net Promoter Score® (NPS®) is a non-financial metric that was created by Fred Reichheld in 2003, and is rapidly becoming the industry standard of reporting customer loyalty. Today we are publishing a proposal to help companies standardise on reporting NPS, aiming to shorten adoption of standards (by some hundreds of years). We call it "Standardised Net Promoter Score reporting format" or "SNPS.09" for short.
Each week, we report on companies who publish their Net Promoter Scores in press releases and earnings reports. NPS is an open standard but like any metric needs to have the details documented, and it is usually not clear how the companies arrived at the score. It seems that there is no established standard to help companies report their methodology. We'd like to continue to encourage the publishing of the metric, and so have created a reporting framework, available for anyone to use. Download the presentation in PDF format here.
Transparency is key.
In May 2009 we published an article "Who Surveys the Surveyors?" which first described the situation, and proposed some solutions. Learning from comments, and taking other industry input we have compiled this presentation to help companies with reporting.
The guidelines of the IASB framework for reporting financial statements are to show Understandability, Relevance, Reliability and Comparability, which we believe can be used for non-financial metrics like the Net Promoter Score. This first SNPS.09 format is aimed at showing how internally calculated numbers can be properly formatted. Later versions may include surveys including competitive companies, and externally calculated numbers.
We believe there is scope for auditing results, which may be a role for accounting firms, or consultancies like Bain. This will help provide transparency and rigour to help investors and customers better understand the value of Net Promoter.
We list the elements to be included, and show an example usage:
- “Acme Company are pleased to announce our most recent Net Promoter Score surveys and are delighted to report an increase of 2 points to 37 (SNPS-09) over same period last year”
- “We asked ‘Based on your recent purchase would you recommend Acme company to a friend or relative?’”
- “Scale used was standard Net Promoter 0 – 10.”
- “We surveyed actual customers on our online shop”
- “An email was sent to all customers after their store transaction 7 days after purchase inviting them to take the web-based survey”
- “The score is the average of the UK, DE and FR countries”
- “The survey is continuous. The score stated was gathered from transactions between 1 April – 30 June 2009. Score is compared to same period in 2008”
- “More than 1000 customer transactions were surveyed in UK, DE and FR”
- “More than 200 customers responded (20%+)”
- “The Net Promoter Score is calculated at 37 (last year 35)”
Download PDF presentation here (2.8Mb).
Future's so bright...
With this proposal, we don't mean to discourage anyone publishing Net Promoter Scores. The information should be readily available from the survey owner - we are simply helping with a framework (or a checklist) for information to be included. We invite you to use it and give feedback on how you implement SNPS.09.
Our five years of Net Promoter experience have given us the confidence to propose an industry reporting standard, but it is only a start. A standard has to evolve with user input. We welcome comments and proposals, and will keep developing the standard in an open way.
Please contribute your views to help us improve.