Why you need more than NPS to drive CX excellence
At a time when customer experience (CX) is critical to business success, being able to measure your customers’ satisfaction levels is hugely important. Often the metric of choice is the Net Promoter Score (NPS). But perhaps we need to think about whether we are asking just too much of the NPS?
Introduced in 2003 in a Harvard Business Review article titled "The One Number You Need to Grow", the NPS has become an important business metric. Using a simple scale of 0 to 10, it asks customers “how likely are you to recommend our company to a friend?” Since it first emerged it has been widely embraced by the business world as a simple, easy-to-understand way of measuring customer satisfaction.
However, it’s not without its own detractors, with some experts in a recent Wall Street Journal article claiming that it may be being over-hyped and oversold. Here are a few of the limitations that experts have identified about the NPS and how it’s being used (and mis-used):
- It is a measure that is based on trying to understand a customer’s future intentions, not what customers actually do. In other words, while someone might be viewed as a promoter, many never actually act on this. In fact, a study of 16,000 consumers reveals that only half of people who said they would recommend a company ended up actually doing so.
- In general, it tends to be biased towards brands that make people feel pleasant or “happy”. Usually, this translates into high NPS scores for companies that are service-focused (such as Virgin Atlantic and Zappos) or service-related (like Southwest Airlines and Amazon). For other types of firm, NPS is often not specific enough, nor is it focused on a relevant goal or goals that are meaningful to those industries.
- People can be contradictory and complex. They can be a promoter and a detractor all at once. One study found around half of all people who actively discouraged others from using a brand had also actively recommended it!
One of the key problems may simply be that NPS is just being stretched too far. For example, the author of the WSJ article listened to earnings calls for 50 S&P 500 companies in 2018 and found that NPS was mentioned 150 times. The metric is being given too much weight, often responsible for justifying all manner of business decisions, from how to allocate budgets to setting targets for employee and executive compensation.
Essentially NPS is very good at telling you what customers think and feel at a specific moment. It doesn’t tell you WHY they think the way they do or are acting the way they are. In other words, you have to guess the reasons why one brand gets a high score while another is judged a failure when compared against its peers. Did the NPS go up because a firm slashed its prices? Or did it go down because its shiny new product was too difficult to use?
The answers to these questions are is important because, without them, you don’t know WHAT to improve to make your CX better. Any initiatives you take are merely guesswork. And given that customers have continually rising expectations, failing to make improvements will most likely hit your bottom line.
So NPS takes you so far, but it’s likely you need to go further. Ideally, you want to support what you can learn from the NPS with more detailed granular insights from customers to reveal why your score is moving in the direction it’s moving. Follow these 4 important steps to achieve this:
- Analyze all interactions, including those from traditional Voice of the Customer (VoC) surveys, along with verbatim information from email, chat and social media conversations.
- Analyze customer conversations at scale, cutting across silos that might exist between departments or channels. You need to capture and analyze all of these conversations if you want to understand why consumers are acting in particular ways.
- In addition to reviewing quantitative data form VoC surveys, analyze what customers actually say in conversations. AI and Text Analytics allow you to extract this type of qualitative insight from customer conversations and even help understand customer emotions.
- Act on this insight you glean - and share it across the organization to the right teams to drive change. Then close the loop to check it has delivered the benefits.
As with all metrics, NPS is very good for doing a single job well - in this case measuring topline satisfaction. However, on its own, it can only take you so far. At a time when CX is increasingly vital to businesses, you need to go deeper. You need access to actionable customer intelligence, based on what customers actually say and feel and you need to use this to drive improvements. Therefore ideally you should be aiming to supplement NPS within your VoC program if you want long-term success.