This CX Mini Masterclass provides in-depth insight about Net Promoter Score (NPS). Show host and customer experience expert, Julia Ahlfeldt, sheds light on why this metric receives so much heat, explains some common pitfalls with its use, and share her perspective how it can be applied correctly. If you’re looking to learn more about the CX industry’s most loved and hated metric, this episode is for you.
Understanding Net Promoter Score
I covered an overview of Net Promoter Score (NPS) along with 2 other popular CX Metrics in episode 31, but it warrants repeating here, before we dive into the pros and cons. NPS was developed by Fred Reichheld, and introduced to the world in a 2003 Harvard Business review article titled “One Number You Need to Grow”. Net promoter score is intended to be applied as a loyalty metric, and is measured by asking survey respondents to rate on a scale from 0 to 10 “How likely is it that you would recommend our [company/product/service] to a friend or colleague?” Ratings of 9 or 10 are considered promoters, ratings of 0 to 6 are considered detractors, and ratings of 7 or 8 are regarded as neutral. NPS is calculated as: % of promoters – % of detractors. The resulting score can range from -100 to 100. Check out the Temkin Group’s annual NPS research for some context around typical score rages among various industries.
A love/hate relationship with NPS
NPS has captured the attention of, and resonated with, business leaders. Perhaps it was because NPS was introduced through the Harvard Business Review, or because it was created by someone from a reputable top consulting firm, or because of the alluring simplicity of understanding the customer through just one number. I’m not 100% sure of the reason, but either way, this score seems to have won over the hearts and minds of executives. For all of its faults and flaws, NPS has helped put customer experience in the spotlight and on executives’ radar.
Personally, I don’t think that NPS deserves this pedestal with business decision-makers, but that’s the current reality. If I had a time machine and could go back to 2003, I’d ask Fred Reichheld not to position NPS as a holy grail of customer loyalty or experience assessment tools. This positioning has been the source of its misuse and the cause of great frustrations within the customer experience professional community.
When I engage with members of the CX professional community about NPS, I see CX leaders who feel almost shackled to a metric that they cannot fully control. They are often forced to be measured by a number that is influenced by a multitude of different factors. I understand their frustration as they endeavor to drive change within businesses that are obsessed with a score…a score that had been hailed as a predictor of things like retention and spend, but in reality is not. Again, some days I really wish that I had that time machine, but until I do, I think the best alternative is to provide some clarity around the pitfalls of NPS so that teams can avoid these.
Touchpoint-specific application: Net promoter score is often incorrectly applied as a metric for specific touchpoints. For example, after a service call out, a company might send a customer a text message survey asking them how likely they would be to recommend the company. A customer’s view is shaped by many interactions, not just one. Sure, the most recent service interaction might feature prominently, because it’s fresh in the customer’s mind, but they will also be referencing previous experiences and what they’ve heard from others. For this reason, NPS is not effective as a satisfaction measure for specific channels or touchpoints. This measuring approach also excludes those customers who haven’t had a service call out. They are still customers and their opinion matters too!
Incorrect methodology: When, where and how you ask this NPS question can influence the results. In its purest form, as a broad-based market loyalty metric, NPS should be applied to a survey of the general consumer population (regardless of whether or not they are you customer). It should use the exact question language as established by the methodology’s creators. It needs to be the leading question in the survey, not tucked at the end after other impression-prompting questions. It also shouldn’t include color coding or other visual indications that may bias responses.
The wrong metric for the job: Many organizations leverage NPS as a performance assessment of overall customer experience or as a KPI for customer-facing teams. A consumer’s impression of a brand is influenced by a multitude of factors and a history of experiences. Knowing this, it’s easy to understand why NPS wouldn’t be the the best KPI for service or CX teams. When it is used in this way, teams can become resentful and frustrated that their efforts aren’t moving the dial.
The right mindset about NPS
If measured correctly, NPS will give you a temperature check on overall consumer loyalty towards your brand. The power of this is that it provides a window into loyalty based both on firsthand experience as well as word of mouth, including prospective, current and past customers…all of the stakeholders that make up the consumer marketplace.
If you are thinking to yourself, this is sounding less like a CX metric, then you might be onto something. A friend and colleague recently said that NPS belongs in the marketing department, not the customer experience team. I believe there’s a lot of wisdom to that. Even is you are measuring NPS correctly, the key is in how it’s used. This requires a change in mindset at the senior level, but it is worth the effort to help leadership teams see NPS for what it is.
Want to keep learning about CX?
If you’d like to checkout more of these CX Mini Masterclasses or listen to my longer format CX expert interviews, check out the full listing of episodes for this CX podcast.
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Decoding the Customer is a series of customer experience podcasts created and produced by Julia Ahlfeldt, CCXP. Julia is a customer experience strategist, speaker and business advisor. She is a Certified Customer Experience Professional and one of the top experts in customer experience management. To find out more about how Julia can help your business achieve its CX goals, check out her customer experience advisory consulting services (including CX measurement, insights, leadership alignment and CX change implementation) or get in touch via email.