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The Net promoter score (NPS), introduced by Fred Reichheld from Bain in 2013, is still one of the most commonly used metrics for businesses to measure and evaluate their customer experience.
At its core the Net promoter score is a customer loyalty metric that uses an index score between -100 to 100 and is determined by asking a customer’s likelihood to recommend your organisation, product or service to a friend. The net promoter score is calculated by subtracting the detractors from the promoters.
A 0-10 scale is used to measure which customers are promoters, passives & detractors.
Customers who score:
– 0-6 are considered detractors (i.e., likely to have a negative perception of your company, product or service or less likely to spend money with your company)
– 7-8 are considered passives (i.e., exhibit behaviour somewhere in between a promoter and detractor)
– 9-10 are considered to be promoters (i.e., more likely to have a positive perception of your company and more likely to continue to purchase from your company and recommend them to their friends).
Yet, given the changes and evolution in customer experience evaluation techniques, emerging new technologies and Big Data, is NPS still an effective metric to assess the health of your customer experience and predict customer loyalty?
Many organisations would argue NPS is still relevant to their business for the following reasons:
It is simple to implement. For example, companies just need to ask customers one key question to predict their loyalty. This means they can quickly implement NPS via surveys over the phone, email or via a third party survey provider, without needing to wait for more detailed and complex research to be conducted. The simple methodology and segmentation of promoters, passives and detractors can also make it easier for employees to analyse the results and action improvements.
It’s easier to benchmark their customer experience against competitors and the industry. For example, the NPS measure methodology design is a globally standard methodology, which makes it easier for companies to compare ‘apples’ to ‘apples’, as NPS is measuring the likelihood to recommend the specific company, product or service, rather than specific product and service attributes or components of the customer journey that may be unique to each organisation.
NPS is simple for everybody in the organisation to understand due to the scale between -100-100+ and the simplicity of being able to interpret that if NPS is going up, it infers customer loyalty is increasing and if it’s going down, it is decreasing.
Also if NPS is implemented in a more effective way, companies can often ask follow-up questions to determine why customers are providing the scores. This can help organisations more effectively pinpoint the drivers of loyalty, rather than just understanding the ‘what’ of the aggregated NPS number.
NPS can drive collective accountability in delivering the customer experience. As NPS is often designed as a whole of company measure, this encourages everybody to be accountable for the customer experience as they are all KPI’d on the same goal. Having a consistent KPI for all employees can influence employees to collaborate more effectively to deliver a unified customer experience.
Putting these benefits aside, there are several limitations and constraints of NPS, which are often associated with the methodology design and implementation approach.
The most common NPS challenges we see include:
NPS provides limited insights into the true health of a customer’s experience and cannot be relied upon as a predictor of a customer’s propensity to be loyal and purchase more from your company. For example, the NPS question itself is asking about a customer’s advocacy towards an organisation’s brand, rather than their propensity to purchase from them again. Whereas, understanding a customer’s propensity to purchase would usually require a more specific intention to repurchase question alongside the NPS question.
While organisations implementing NPS more effectively than others often include follow-up questions in their surveys to understand the root causes of the NPS score, the insights are not often translatable or useful. For example, many organisations often ask generic questions which means a customer might not be too specific about whether they had a product related issue, service issue or were generally dissatisfied with one small aspect of the experience rather than an array of things.
What’s more customers are often bombarded with NPS surveys from every company that they purchase a service or product from, which can often result in them getting survey fatigue. This factor combined with the time poor nature of most consumers these days, often results in customers providing little detail about the drivers of their experience or not responding at all. As a result, organisations find it challenging to obtain the breadth and depth of insights they require to obtain a comprehensive evaluation of their CX performance, pinpoint root causes and identify impactful improvements to their customer experience.
Even if companies tailored their NPS research to obtain a comprehensive level of insights about the drivers behind their NPS scores, this information would unlikely provide a holistic understanding of customer loyalty and experience performance. For example, NPS wouldn’t accurately help predict customer churn or the impact that employee engagement and culture would have on influencing and improving customer loyalty. Nor would it pinpoint operational and service issues that were impeding the delivery of a unified experience. This is why your NPS methodology would need to be evolved to align with other key interrelated metrics and insights across your key business functions and teams.
NPS insights can often be biased due to the fact that customer responses are not standardised and they are qualitative in nature. This means that organisations are often not able to interpret these effectively and even if these are interpreted, they rely on humans to interpret them manually, resulting in potential inherent bias. This in turn leads to poor quality insights that are used to inform CX improvement investment decisions, resulting in ‘garbage in’, ‘garbage out’.
NPS is an attitudinal metric meaning it is based on what customers say and perceive at the time, rather than it being an actual reflection of how they behave. For example, a customer may demonstrate their dissatisfaction of their experience via NPS but may not act on it for several reasons, such as switching barriers or the transaction may not be considered an important influencer of loyalty. For instance, I have been with the same mortgage provider for the past 3 years and despite the increasing fees and amount of effort required to make changes and updates to the mortgage, it is easier to suffer through the poor service experience, rather than switch providers and go through the same admin headache again. In a similar light, I might provide a high NPS score for a specific transaction that I don’t consider influential to my satisfaction with an organisation and then switch the next day. In this instance just because I provided a high NPS score for a specific transaction, this score doesn’t infer my broader and long-term satisfaction with or loyalty towards that company.
NPS can often tell you the channels or transactions that are working well but it does not effectively evaluate the performance of the broader customer journey. We often see many organisations measure the NPS of a specific customer contact channel, such as a recent interaction with a call centre or a website visit, rather than an ongoing and integrated review of a customer’s interactions with their company and a broader review of their entire customer journey. Measuring these transactions isn’t reflective of their overall experience with your company and relying on transactional or channel specific experiences will likely detract you from focusing on the entire customer journey. It will also make it challenging to obtain the critical insights, such as the drivers of loyalty, which are required to inform and shift customer behaviours. While it is important to understand from a bottom-up view how each transaction, channel and product influences NPS, it’s also important to understand from a top-down perspective the key drivers of loyalty that will influence a step change in the customer experience and business outcomes.
The timing of a NPS survey after the experience is likely to have an impact on its effectiveness to predict customer churn behaviour. This has been reinforced by recent global loyalty research from Gartner indicating that customers often forget the details of their experience over time and therefore their attitudes and perceptions of the company are likely to change. The study inferred that after a 3 month time period, a customer is only likely to remember their salient experience (i.e., the things that are most important to them rather than every trivial detail). Given this, if a company conducts NPS research immediately after the end of the transaction with its customers, this is likely to make it more challenging to identify the most critical drivers of loyalty that are required to inform improvements in the customer experience. Therefore, relying on the NPS insights alone in this instance to make decisions is likely to result in ineffective CX investment decisions.
Finally, we need to remember the purpose of why we are measuring CX, rather than getting bogged down by CX metrics, such as NPS, CSAT or Customer Effort Score (CES). For example, it is common for organisations to start the CX measurement conversation with the types of metrics they would like to use to evaluate the effectiveness of their CX.
The issue is that organisations get so caught up with the concept of needing to measure CX, this can often distract them from the broader purpose of measurement, such as the ‘why’, ‘what’ and ‘so what’, ‘now what’. I.e., How is our CX strategy currently tracking, What is driving CX performance and loyalty? What are the levers we can pull to improve performance? And which parts of the customer journey do we need to improve, rather than the individual channels and transactions?
While standard methodologies like NPS can be useful, they still need to be designed and customised to consider the specific nuances of your organisation, such as your culture, strategy, operations, products and customer segments, to ensure CX has a direct impact on your business performance.
In summary, we could spend all day debating NPS benefits and constraints and there are many more we could add to the list. Yet, this will not help us improve the way we measure and enhance the customer experience to increase customer loyalty and improve business outcomes. It’s therefore time we shift the discussion and actions away from whether to use specific metrics towards how can we effectively design, implement and integrate a customer experience performance management approach for the purpose of improving customer, business and employee outcomes.
 Cited by Gartner CEB, ‘Using Customer Feedback to Predict Behavioral Loyalty’, 2018 Customer Experience Loyalty Survey, Gartner, 2018