Paste your Google Webmaster Tools verification code here

Is NPS outdated and irrelevant?

Net Promoter Score

The Pros and Cons of Net Promoter Score

Companies across the globe continue to recognize that superior customer experiences yield greater business results, resulting in brand loyalty while driving revenue growth. When it comes to market share, losing the Customer Experience (CX) race can be detrimental for a business.

The Net Promoter Score (NPS) has become a common tool to measure the state of an organization’s CX in an effort to improve customer service. It has become a measurement tool that’s widely recognized and increasingly adopted by organizations globally to understand a customer’s sentiment and loyalty towards a brand, as well as whether they are more or less likely to promote the company.

How it Works

The NPS system seeks to measure not just customer satisfaction, but it gauges whether customers like your company so much that they’d tell their friends about it. It asks one question: “How likely is it that you would recommend [Organization X] to a friend or colleague?”

Customers are asked to rate their answers on a 0-10 scale, which is divided up into three categories:
“Detractors,” “Passives,” and “Promoters.”
0 – 6: Detractors
7 – 8: Passives
9-10: Promoters

But can one question really provide enough detailed information to create a CX strategy? Some executives say no.

Let’s take a look at some pros and cons of NPS:

Pro: The NPS system is easy to use

The NPS online poll does not require a statistician to administer it. The example survey question is based around one idea, whether your customers like your company enough to recommend it, and often includes a few follow-up survey questions to understand why people would recommend/would not recommend your brand. You can easily send it out to customers through email or post on your website.

Pro: The NPS is great for management

When management is looking for an easy, big-picture gauge of customer loyalty, the NPS works. Not only do Net Promoter Scores help a company see how it’s doing against the competition, but managers can use it to see how one department’s services are doing against other departments. For example, does the tech service division receive higher scores than the field-service department? If so, how can the company improve so that all of the departments are getting equal, high scores?

Pro: The NPS uses a common language to classify customers

The NPS questionnaire breaks scores down into three customer categories: Promoters, Detractors, and Passives. The categories make it easy to classify a customer’s level of loyalty, and it gives everyone in your company the same language when referring to customers. Do you have a large group of Promoters who you should rally to post reviews or participate in a focus group? Are there Detractors who you need to assign someone to do follow-up work with? The system makes it easy to tell customers apart.

Pro: The NPS system is correlated with increased business growth

Numerous studies, including those conducted by the Harvard Business Review, Satmetrix, and Bain & Company have found a strong correlation between high Net Promoter Scores and revenue. The research shows that when companies adopt the NPS question, and use it as a key metric, it helps drive business growth as the company becomes more focused on improving the score.

Con: NPS is too simplistic

The NPS scale accounts for only three types of customers: ‘promoters’, ‘passives’, and ‘detractors’, and is based on a simple survey question: “On a scale of 0 to 10, how likely are you to recommend our company/product/service to a friend or colleague?” Customers who give an organization a score of 9 or 10 are known as ‘promoters’, while those who provide a score of 6 or under are called ‘detractors’. An organization’s score is calculated by subtracting promoters from detractors, ignoring customers that give a score of 7 or 8, who are known as passives.

Not only is this question simple and vague, it fails to provide any insight or necessary information to interpret the opinion held by customers. It lacks detail and prevents organizations from actioning feedback in real time.

Because it is very difficult to understand a customer’s journey from the inside, organizations need to be investing in measurement tools that enable them to gain an in-depth perspective to really find out where their CX is failing.

Con: Without a plan in place to act on the results, the survey won’t help your business

Sending out a NPS questionnaire is a great first step to understanding customer loyalty, but to really make the NPS system effective, you need to be prepared with a follow-up plan. If your scores come back really low what is your next step? Will you send out more detailed surveys to pinpoint the issues? Make sure you map out a customer experience plan to address any issues your Net Promoter Scores reveal.

Solution: Implement more detailed follow-up questions

Every smart implementation follows up with a qualitative question, asking why? Some systems will even vary the questions based on the score, asking things likes “What did we do well?” and “What could we improve?” The real value is the Why answer. The customer tells you what just happened and how you could improve it. We add these Why questions to gather intuitive data, which allows a more specific game plan for future customer experience  success.

Share

Comments are closed.