Blog: NPS – the one-eyed king in the land of the blind?
“Would you recommend us to a friend?”…..
I’m sure you recognise the inevitable question at the end of every purchase. It’s used to measure customer satisfaction, and among people like us, it’s known as the Net Promoter Score (NPS).
NPS is the standard Customer Experience (CX) statistic, and believed by many to be the equivalent of a Facebook Like or a Retweet on Twitter. But prevalence doesn’t mean perfection. While NPS is an easy win method for service-providers to gather CX information, it is not without its weaknesses. Here we examine how to make the most of NPS in informing a CX programme:
The benefits of NPS
What gets measured gets managed
Determining your company NPS score is a great way to bring focus to CX. Today, we’re a long way from relying on fluffy feel-good statements, with companies now actually recording figures and designing and managing CX as a business priority. Expressing NPS as a number helps focus the mind and demands people step-up to deliver a good user experience.
A simple statistic
Take away the percentage of detractors from the promoters and voila – there is your NPS score. Compare this simple-to-understand formula with more complicated metrics such as Internal Rate of Return, Net Present Value or Earned Value. Many businesspeople pretend to fully understand these concepts, but rush to Google when they start to use them.
Perfect for customer opinion
NPS is fully focussed on the customer’s opinion. It doesn’t measure hard or objective data, it just takes into account the perception, judgement and attitude of the user at the end of a transaction. This is what CX is all about – the subjective perception of someone’s interactions with a company and its product.
The limitations of NPS
NPS is easy to understand, but designing an optimal customer experience is not. Delivering great CX is the result of a delicate interplay of six key areas:
- CX Design
- Company culture
- Voice of the Customer & Insights
If all of these need to be managed, then all of these need to be measured. A single NPS score to gauge CX is too simplistic.
Sometimes NPS falls flat
Is your NPS statistically robust? Probably not. Give an experienced manager a piece of market research and they will always check the sample size, often followed by a standard deviation and margin of error review. Only if the manager feels the research is reliable will they begin to examine the results. Why aren’t these checks imposed on NPS? NPS samples are self-selecting so not a fair representative of the total base. Have you ever seen a NPS score followed by a statement of margin of error or a standard deviation number? Er, no.
NPS is open to abuse
Some people actively “look” for a “good NPS” to keep the boss off of their back. This is not very ethical, not very smart, and ultimately, not a great base for measuring a full CX programme.
NPS needs an emotional bond to stay ‘clean’
How often do you go around singing the praises of your toothbrush? What about your TV set or vacuum cleaner? They do the job but above that, they don’t warrant a call to your nearest and dearest. Recommending a brand to someone else relies on you having an emotional bond with the product – you care enough about the thing to talk about it. Without that bond, an NPS score is likely to only be a 0-3. That doesn’t mean something’s bad about the product, unless it stops performing, but it won’t score highly because there’s no emotional attachment. Because of this, a true picture of a brand’s NPS is denied.
Flimsy for fundamental decision-making
The logic is the higher the score the happier the customers – so we all aim for a high NPS, right? But if the key management question is ‘Where do I focus my CX improvements to get a higher NPS score?’ then you have to decide where to start:
• Do you strengthen your strengths?
• Do you improve your weaknesses?
• Do you focus on detractors?
• Or do you lavish attention on your promoters?
• And what about the ‘passives’ (the ‘middle’ category)? Would it be more profitable to improve their CX?
• Does the single variable of NPS give you the insight you need to make this decision?
And consider this – if NPS was a robust statistical concept you would expect a bell curve in the score. This would indicate the largest group would be a score from around 4-7. In NPS, if this was the largest group it would run from the top end of the detractors (4-6) and take in half of the passives (7). Would it therefore make business sense to focus on them? Another reason to doubt if a single NPS score can reflect CX and tell management where to take action.
Get the data you need for a CX dashboard
As we’ve shown, NPS is only a single statistic, and not sufficient to measure CX on its own. Here are just three additional considerations for CX measurement.
If you ask, act
If you’re looking at Voice of the Customer (VoC), an essential metric is how your company ‘closes the loop’. According to Gartner, 95 per cent of companies collect customer feedback, but fewer than half bother to tell their staff, and many less tell customers how their feedback was used. A ‘closing the loop’ metric is essential.
‘Happy employees equal happy customers’
Like Richard Branson says, you cannot deliver a great customer experience without your employees supporting the company, products and brand. A CX dashboard needs some metrics which deal with employee satisfaction.
Incremental improvements must be measured
When designing CX your company will be analysing and defining customer journeys. A key activity is prioritising all the possible improvement activities. In your dashboard you want to know how well you are performing on your key customer journeys, and to track the outcome of the improvements you’ve made. Metrics for these two considerations are vital additions to a CX dashboard. Once you have your dashboard of CX measures in place, you have the right input for the management question: ‘Where to focus the company’s attention to increase the Customer Experience?’ The dashboard will tell you where to improve and where to take action.
NPS is a good start for CX. It’s easy to use and easy to measure and it places a welcome focus on the experiences of your customers. However, NPS is only a single tool in what should be a full toolbox of CX measurements. It’s not statistically robust, and ultimately, if used alone, it’s not fit as the foundation for making key CX management decisions. Consequently, NPS is leading the way in the world of CX novices. It’s the one-eyed king in the land of the blind. If you want to move beyond this one-dimensional approach to CX, call CX NPD. We’ll help you optimise and measure each of the six CX key areas, and to create the right vision for an excellent CX programme and great customer experiences.