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Arguing About NPS is a Waste of Time

Michael Allenson | Mar 9, 2017 239 views No Comments

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Last week I responded to an article that was titled NPS is Dead. There are a few topics in Customer Experience that get people more exercised than discussing NPS. I’m frustrated by this ongoing argument, not because I have a strong opinion on one side or the other, but because it takes your eye off the ball.

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Copyright: andreypopov / 123RF Stock Photo

The whole point of a CX management program and frankly, the underlying point of using a system like Net Promoter is the belief that an improving Customer Experience and having a more loyal customer base leads to greater business success.

Let me frame this debate differently. If a company is using NPS and they increase their NPS from 0 to 15 and sustain it, do we think that the company’s business results will have improved? What if a company uses Customer Effort Score and their % of customers giving a top two box agreement score on the easy question increases by 10 percentage points, do we think the company’s business results will have improved? Whether we are using NPS, CES, Osat, CX Index or any other often used metric, if it is improved and sustained, I can guarantee you the business will be improved.

Here’s my problem with the whole argument. Why are there so few companies that we can point to that have made sustained gains over long period of time? If we look at CX leaders across a variety of industries, which of them can we say rose from the ashes? Yes, we could argue that Apple is one. But come up with another. How many other leaders were at one time mediocre? I challenge anyone reading this to comment and name a company they think has truly transformed.

By arguing about metrics, we ignore the most important point. To get beyond incremental improvement, requires a major change of culture and business structure that is extremely difficult to accomplish. This is a major commitment from leadership of the organization including not only the C-Suite, but the company’s owners, which can include institutional investors, venture backers, or private owners. At a time when the vast majority of CEOs believe that CX will be one of their most important differentiators, do they really understand what it takes to accomplish it? Are they prepared to see it through?
Here are a couple of thoughts on things companies should be worried about instead of choosing the proper metric.

1) Focus on real customer value, not an imperfect proxy – Why do we even need a customer outcome metric at all anymore? The point of these metrics was to come up with a proxy for business outcomes that is easy to monitor in order to gauge impact. With the many advances in database, data management and analytics technologies, It is becoming easier and easier to have a solid customer value metric readily available. Why not use estimated customer lifetime value as your metric instead?

2) Build a system of continuous improvement linked to customer value – The companies that are having the most success at moving the needle on customer experience and their business results are statistically linking customer experience elements and business outcomes. They are identifying what they can work on that will impact revenue growth, loyalty and retention. They have cross functional teams that are empowered to take action, including modest changes in the way the company does business.

3) Focus on results at the individual customer level – For years we have been focused on a top down approach to customer experience. We have focused on maximizing performance within specific channels, at specific touchpoints or with broad customer segments. Today, we understand that individualized customer journeys can be very unique. Any one company can have hundreds of customer journey patterns. A focus on customer value allows a company to use outcomes such as how many customers did we increase LTV with in the past quarter? How many lost value? Which customers do we have the most opportunity to improve value? What will it take? Technology allows us to treat customers as individuals at scale. Its time for management thinking to catch up with the technological capability.

Why are there so many upstart technology companies that are being referred to as disruptors? In almost all cases, these companies are disruptive because they are creating a better customer experience. Technology improvements make parts of the traditional customer experience ripe for this disruption in many industries. Translated, this means there are significant opportunities for improvement to the customer experience for established companies in almost every industry that are just waiting to be addressed. The question for companies is whether they will get beyond silly arguments over NPS and other metrics and get serious about identifying and addressing business vulnerabilities that lie in their customer experience.

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