Once a Harvard Business Review article billed it as “The One Number You Need to Grow.” Today, the Net Promoter Score’s (NPS) fabled beginnings have met with a dose of reality.
NPS features a simple, one-question survey. It asks customers how likely they are to recommend a product or service to friends or colleagues. Respondents can select from a 0 to 10 scale. Those who answer on the low end (0 to 6) receive the label “detractors.” Customers choosing 7 to 8 are “passives,” with those scoring 9 to 10 called “promoters.”
But the NPS approach—while simple to administer—has several pitfalls.
#1: NPS Can Deliver the Same Score in Different Situations
Not only is the NPS survey simple, the NPS calculation is simple too. Companies derive their NPS score by subtracting the percentage of detractors from the percentage of promoters.
The problem is, that can yield a different answer in vastly different scenarios. Here is an example:
- Company A has 40 percent promoters and 20 percent detractors.
- Company B has 20 percent promoters and 0 percent detractors.
Both Company A and Company B have an NPS score of 20. Although the scores are the same, they should have different customer strategies. The NPS score alone provides no real insights into what those approaches should be.
#2: NPS Isn’t Precise
NPS offers respondents 11 answer options. Yet, scoring places customers in three broad groups. Companies have no insight into the meaning or make up of those segments.
This is especially important when analyzing the detractor group. Do customers who offer a rating of “0” behave differently than those whose score is a “6”? Do detractors at different levels need varied treatment or remediation strategies? Is one group more apt to vocalize complaints online and influence others?
As today’s brands compete for social, empowered customers who are apt to shift loyalties rapidly, answers to those questions are vital. NPS alone can’t answer them.
#3: The NPS Question Isn’t Always Relevant
NPS creator, Frederick Reichheld, admitted when he first wrote about NPS that the “willingness to recommend” (WTR) question doesn’t work for every industry, product or situation.
Why? In some cases—such as B2B purchasing—the person conducting the transaction does not have actual buying authority. Also, the NPS question doesn’t apply in monopolies or other situations where customers have limited choice.
There is another issue inherent in NPS design. As Forrester analyst Richard Evensen notes, the 0-10 scale doesn’t have meaning in all cultures. This suggests NPS is less useful for enterprises with an international presence.
In fact, Evensen recommends that companies should stop using NPS. He affirms the question has merit—to analyze customer satisfaction and perceived value. However, NPS has not proven to be a good indicator of intention or action in many customer scenarios.
What does all this mean?
Companies need to recognize NPS for what it is: a reasonable snapshot of aggregate customer satisfaction. Leaders can no longer trust that a high NPS score means their company is delivering good-quality service.
Brands must realize that NPS is not a silver bullet to address all their customer experience measurement needs. They need to increase focus on open-ended surveys to collect customer sentiment. In addition, they must perform real-time analysis of customer interactions to gain up-to-the minute insights on customer perceptions. And they need to operationalize this knowledge and evolve their strategies around customer feedback to deliver higher quality experiences.