This article was originally posted on: https://www.eglobalis.com/the-hidden-flaws-of-nps-why-better-new-alternatives-are-emerging-for-your-business/#
Introduction
Net Promoter Score (NPS) has long been heralded as the go-to metric for gauging customer loyalty and satisfaction. However, its effectiveness and relevance have come under scrutiny. While NPS provides a quick snapshot of customer sentiment, it often oversimplifies complex customer relationships, leading to frustration among businesses seeking deeper insights. This article delves into the primary frustrations with NPS, explores alternative metrics, and examines why NPS is better suited for transactional evaluations. We’ll also highlight real-world cases where companies have moved away from NPS in both B2B and B2C contexts.
Frustrations with NPS
1. Oversimplification of Customer Sentiment NPS categorizes customers into promoters, passives, and detractors based on a single question. This binary approach fails to capture the nuanced emotions and motivations behind customer feedback, leading to a superficial understanding of customer experiences.
2. Lack of Actionable Insights or Simply Too Few The simplicity of NPS does not provide detailed reasons behind customer ratings. Companies often struggle to translate NPS scores into specific actions that can address customer concerns or enhance satisfaction.
3. Transactional Nature NPS focuses on a single point in time, reflecting immediate reactions rather than long-term loyalty or overall experience. This makes it less effective for understanding ongoing customer relationships and predicting future behavior.
4. Cultural and Regional Bias The interpretation of the NPS question can vary significantly across different cultures and regions, leading to inconsistent and potentially misleading results.
5. Inadequate for Complex B2B Relationships In B2B environments, where multiple stakeholders influence the buying decision, NPS’s single-customer perspective often falls short in providing a holistic view of the customer relationship.
6. Encourages Gaming the System Employees may manipulate customer interactions to boost NPS scores rather than genuinely improving the customer experience. This focus on scores can distort priorities and behaviors within an organization.
7. Limited Predictive Power NPS does not consistently correlate with key business outcomes such as revenue growth or customer retention. This limitation questions its reliability as a sole metric for strategic decision-making.
8. Failure to Identify Root Causes Without qualitative data, NPS fails to uncover the underlying reasons for customer dissatisfaction or loyalty, making it difficult to implement effective improvements.
9. Neglects Passive Customers NPS primarily emphasizes promoters and detractors, often overlooking passive customers who may hold valuable insights about areas needing improvement.
10. Inconsistent Survey Implementation Variations in how NPS surveys are conducted, including timing and phrasing, can lead to inconsistent and unreliable data, complicating the comparison and analysis of results over time.
Alternatives to NPS
1. Customer Satisfaction Score (CSAT) measures customer satisfaction with specific interactions, providing more immediate and actionable feedback than NPS. It helps companies pinpoint areas needing improvement in real-time.
2. Customer Effort Score (CES) gauges the ease of customer interactions, emphasizing the importance of reducing customer effort to enhance satisfaction and loyalty. It’s particularly useful for evaluating support and service experiences.
3. Value Enhancement Score (VES) assesses how well a product or service meets customer needs and enhances their value. This metric helps companies align their offerings with customer expectations and drive long-term loyalty.
4. 360-Degree Feedback Systems Comprehensive feedbac systems collect data from multiple touchpoints, including surveys, social media, and direct interactions, offering a holistic view of the customer experience and enabling more strategic improvements.
5. Customer Impact Score (CI-Score) This instrument uses 15 empirically derived items to enquire about the perceived customer centricity of a company from the customer perspective. It provides feedback on three dimensions: Functionality, Relevance, and Emotion. The sore allows for granular, actionable customer feedback. Those are only some of the options available for your company. For more suggestions, read here.
Real-World Cases of Companies Moving Away from NPS
1. Fujitsu transitioned from NPS to a comprehensive Voice of the Customer (VoC) program, integrating various feedback sources to better understand and respond to customer needs. This shift has enhanced their ability to link customer feedback with business outcomes such as profitability and customer retention.
2. Microsoft has increasingly supplemented NPS with Customer Effort Score (CES) and Customer Satisfaction Score (CSAT) to get a fuller picture of customer experience. They found that these metrics better capture the nuances of customer interactions and help identify areas for improvement.
3. Adobe has moved towards a more holistic customer experience management approach, integrating multiple feedback mechanisms beyond NPS. This includes leveraging advanced analytics and AI to interpret customer feedback and drive actionable insights.
4. Airbnb has de-emphasized NPS in favor of more granular metrics that reflect the diverse experiences of its hosts and guests. They have adopted a combination of CSAT, CES, and bespoke metrics tailored to specific aspects of their service.
5. SAP has begun phasing out NPS in favor of a more comprehensive Data driven, VoC program and other strategys to achieve its own 360-degrees views of customers. This approach involves real-time feedback loops and advanced sentiment analysis to understand customer needs better and enhance service delivery.
6. Slack, recognizing the limitations of NPS, has integrated it with other feedback tools such as real-time surveys and user experience analytics. This multi-faceted approach provides a more detailed and actionable understanding of user satisfaction and product performance.
These examples illustrate a broader trend of companies moving away from relying solely on NPS, opting instead for more nuanced and comprehensive methods of measuring customer experience and satisfaction. This shift is driven by the need for deeper insights and more actionable data to improve customer relations and business outcomes.
Future of NPS
Although Gartner has made predictions about NPS, I believe NPS will survive until business leaders understand the ‘’efficiencies’’ behind NPS which are quite few. It works best when used alongside many other metrics; alone, it doesn’t make much sense. Gartner predicts that more than 75% of organizations will abandon NPS as a measure of success for customer service and support by 2025. This trend underscores the growing recognition of NPS’s limitations and the need for more robust feedback mechanisms.
A New potential, More Comprehensive Alternative Beyond NPS: The Customer Impact Score (CI-Score) or the 360-degree revolution.
As we mentioned, this is a broader and more detailed alternative to NPS. The CI-Score uses 15 empirically derived items to assess the perceived customer centricity of a company from the customer’s perspective. You can learn more and explore it here: https://www.custopia.io/
Conclusion
While NPS offers a straightforward and easily implementable metric for gauging customer loyalty, its limitations have become increasingly apparent. Its oversimplified approach, lack of actionable insights, and cultural biases make it less effective for understanding complex customer relationships and predicting long-term loyalty. Alternatives such as CSAT, CES, CI-Score, and VES provide more detailed and actionable insights, enabling companies to better meet customer needs and drive sustainable growth. The shift away from NPS towards more comprehensive feedback systems reflects a broader trend in the industry and more understanding of our customers, emphasizing the importance of a nuanced and multi-faceted approach to customer experience management.
Your thoughts will be appreciated!
Sources
1. Why NPS Doesn’t Work Any More, and What’s the Alternative? Eglobalis, https://www.eglobalis.com/why-nps-doesnt-work-any-more-and-whats-the-alternative/.
2. Beyond NPS: Why Customer Feedback Needs a 360-Degree Revolution, Eglobalis, https://www.eglobalis.com/beyond-nps-why-customer-feedback-needs-a-360-degree-revolution/.
3. NPS: A Misleading Metric For B2B In Unprecedented Times? Forbes, https://www.forbes.com/sites/peggyannesalz/2020/12/03/nps-a-misleading-metric-for-b2b-in-unprecedented-times/.
4. How to Calculate Customer Lifetime Value (CLV) & Why It Matters, HubSpot, https://blog.hubspot.com/service/how-to-calculate-customer-lifetime-value#clv-formula.
5. Definitive Guide to Net Promoter Score, Salesforce, https://www.salesforce.com/eu/learning-centre/customer-service/calculate-net-promoter-score/.
6. Is the Net Promoter Score Dead? Why it May be Time to Look Beyond This Metric, FastCompany, https://www.fastcompany.com/90789303/is-the-net-promoter-score-dead-why-it-may-be-time-to-look-beyond-this-metric.
7. Using Sean Ellis Test For Measuring Your Product/Market Fit, Product Coalition, https://productcoalition.com/using-sean-ellis-test-for-measuring-your-product-market-fit-c8ac98053c2c .
8. Gartner Predicts More Than 75% of Organizations Will Abandon NPS As a Measure of Success for Customer Service and Support by 2025,” Gartner, https://www.gartner.com/en/newsroom/press-releases/2021-05-27-gartner-predicts-more-than-75-of-organizations-will .
9. How Listening to Your Customers Can Fuel the Change You Need, FastCompany, https://www.fastcompany.com/90842159/how-listening-customers-fuel-change-you-need.
10. What’s Next in VoC as Traditional Customer Surveys Fade from Our Memories? Eglobalis, https://www.eglobalis.com/whats-next-in-voc-as-traditional-customer-surveys-fade-from-our-memories/.
I definitely don’t mean that my articles or dislike of this metric will influence the final nail in the coffin for NPS. Rather, they offer a different perspective, as I believe AI will create alternatives that provide better and more accurate data and feedback.
Informative article with excellent case studies featuring alternative methods from impressive companies.
However, the most common alternatives don’t go far enough. Common NPS replacements like CSAT, CES, and others share a fundamental flaw: they rely on broad, one-size-fits-all questions. Unless respondents take the time to elaborate, these metrics don’t provide any actionable insights! And with B2B NPS response rates already hovering between 3-9%, even if respondents fill out the follow up question you can easily lower the response rate by a further 50%!
Another major issue I’d add to the extensive list of NPS limitations is that it’s a lagging indicator of client experience (if it measures that at all). It tells you what’s already happened, but offers little in terms of real-time insights into where things are heading and what to do in order to prevent dissatisfaction or even churn.
I’d also like to take this opportunity to suggest an alternative we’re working on at Cliezen (full disclosure: I’m the founder) – https://www.cliezen.com . We’ve created a dedicated B2B CX feedback methodology that tackles these limitations head-on, addressing the issues that plague NPS, CSAT, and other simplistic approaches. It’s as easy to administer as NPS and only takes about 20 seconds of time from the client to answer but provides a detailed insight into the experience gap.
Gathering feedback and understanding the needs, wants, and expectations of B2B clients can’t be entrusted to a simple, hypothetical question. B2B relationships are inherently complex and dynamic, involving multiple stakeholders on both the supply and demand sides. These relationships require a more sophisticated and modern feedback system. Our approach captures insights at every touchpoint of the vendor-client relationship, providing actionable data that digs deep enough to uncover the root causes of experience gaps.
From a B2B perspective, I fully agree with the critiques of NPS—and the same applies to most of the popular methodologies in use today.
With all the drawbacks you mention (and there are many more!), it’s shocking that companies continue to rely on these methods to understand and serve their B2B customers better.
It’s time for a fresh approach, rather than clinging to the same old trio of tired and useless metrics.
Hi Kari, I completely agree with your analysis, especially regarding the inherent limitations of metrics. You’re absolutely right in pointing out that these broad, generic questions often fail to provide actionable insights, especially in the B2B space. The complexity of B2B relationships, involving multiple stakeholders and dynamic needs, demands a much more nuanced and precise feedback mechanism.
In my experience working with companies like Samsung, we’ve found that a one-size-fits-all approach not only dilutes the quality of insights but also makes it harder to pinpoint the exact pain points in the customer experience.
You’ve also highlighted a key issue with these traditional metrics: they’re lagging indicators, only capturing what’s already happened. This makes it nearly impossible to act in real time or proactively address dissatisfaction before it leads to churn. We need metrics that do more than just give us historical data; they must offer real-time, predictive insights that allow businesses to stay ahead of customer needs.
It’s refreshing to see new solutions like yours being developed to address these flaws, and I wholeheartedly agree—it’s time for companies to stop clinging to outdated, simplistic metrics. As I said in previous article maybe AI real time feedback will be able in the future, to replace some of the existing metrics and make it much better. Thanks for your thoughts and have a lovely weekend R