2 Procurement Uses of Net Promoter Score

PurchTips edition #319

 

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By Charles Dominick, SPSM, SPSM2, SPSM3

Picture of Charles Dominick, SPSM, SPSM2, SPSM3

How Can Net Promoter Score Be Used In Procurement?

Net Promoter Score has emerged as one of the most popular metrics for customer satisfaction. This edition of PurchTips will explain Net Promoter Score and suggest two ways you can apply it to procurement.

One of the reasons that Net Promoter Score has become so popular is that it is simple. It involves asking only one question: "On a scale of zero to 10, how likely are you to refer this business to a friend or colleague?" And the analysis of responses is relatively simple, too.

Respondents are categorized into three groups: "Promoters" (who've responded with a nine or 10), "Passives" (who've responded with a seven or eight), and "Detractors" (who've responded with a six or less). To arrive at Net Promoter Score, you simply subtract the percentage of Detractors from the percentage of Promoters.For example, if 55% of respondents were Promoters, 25% were Passives, and 20% were Detractors, then Net Promoter Score would be 55% - 20%, or 35%.

How could you use Net Promoter Score in procurement?

First, consider asking your internal stakeholders how likely they would be to recommend each major supplier they deal with. You could calculate the Net Promoter Score for each major supplier, then use it to reinforce relationships with the best suppliers, improve suppliers with high potential but unsatisfactory performance, and replace suppliers with low potential and unsatisfactory performance. You could create an aggregate Net Promoter Score for all suppliers, then make it a procurement goal to improve that number.

Second, consider using the Net Promoter Score when surveying the procurement department's internal customers. You could modify the question to be something like "On a scale of zero to 10, how likely are you to recommend collaborating with Procurement to another department?" After calculating the procurement department's Net Promoter Score for the first year, you could make it an annual goal to improve the score each year.

Because the Net Promoter Score is so popular among executives, it can only help the procurement department's reputation by adapting and applying it.

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