Net Promoter Score: How CX Leaders Are Keeping An Old Metric Fresh
When organizations look for feedback on how their customers feel about the products and services they offer, the Net Promoter Score (NPS) is often the first port of call.
NPS is an indicator that scores the likelihood of a customer recommending the services of a company to others. It’s delivered through a survey to the customer and customers are then rated as ‘detractors’, ‘passives,’ or ‘promoters’, depending on the score they give.
A score of 0 – 6 means a customer is a detractor, 7 – 8 means they’re passive in their view, while a 9 – 10 score means the customer is counted as a promoter, a person likely to tell others about the great level of service they received.
NPS has been central to internal discussions on how to improve customer experience, retention and life value since its development by Fred Reichheld in 2001. But not all companies use NPS as they should, industry stakeholders believe.
“NPS had a long and distinguished history and the metric itself is old enough to have its own driving license,” Nate Brown, Chief Experience Officer at Officium Labs, a global company that helps clients build better CX journeys, and Co-founder of CX Accelerator, told Nearshore Americas recently.
“There’s some brilliance in the Net Promoter System, the methodology around NPS. It aids a company in identifying its detractors and allows them to take intentional steps to make those detractors promoters and even be able to quantify the value of that, through metrics like the customer lifetime value. The combination of those two metrics is powerful for an ROI of CX calculation,” he added.
But so dominant has the NPS ideology become that many companies have used it for its own sake. Simply collecting NPS isn’t a silver bullet to solve customer experience issues.
“Some have used NPS well while others have not. Others still have been addicted to it in a very unhealthy way,” Brown added.
Make a Net Promoter Score Actionable
The chief criticism of NPS is not of the metric itself, but of how companies choose to apply it, Pete Weaklend, Senior Vice President of Advisory Services at CX Solution Source, a firm that provides advisory services for clients looking to expand their contact center outsourcing services, explained.
“Customers can give a company a rating, but what is the company going to do about that? How do those results become actionable? If you can’t operationalize improvements from your findings, don’t collect the data,” said Weaklend.
“If you’re going to ask then you better act.”
Even before rolling out an NPS survey, companies must have a plan on how they will begin applying discoveries about CX and turn them into solutions that move detractors up the ranking to, with time, company promoters. This, after all, is NPS’ intention.
Keep It Short and Sweet
Industry focus on CX has benefited customers by helping companies to listen to their customers and, in turn, improve upon their services. Competition across industries has meant that the CX journey is a powerful tool to retain business and differentiate one company from another. But it also means that the demands from companies to hear the thoughts of customers have become an ever-present irritation.
“Surveys now cause irritation for lots of people, but at the same time, it’s important to gather feedback,” argued Weaklend.
“But companies commonly ask their customers to answer a 15-question survey. No one wants to do that! The surveys should be two, maybe three, questions long,” he added.
“If you can’t operationalize improvements from your findings, don’t collect the data,” — Pete Weaklend
For Brown, customers, particularly Gen Z consumers, are tired of the constant request for feedback. Many customers feel exploited.
“As a customer, if I’m overflowing with excitement or frustration I will leave a review or a referenceable activity myself. But I don’t want to be manipulated into doing that, especially in the cases whereby NPS is used only to identify promoters,” he argued.
To help dampen any annoyance a customer may feel at the sight of an NPS survey, company’s must guide expectations from the start, says Weaklend: “Set the right expectation – tell the customer it will take 15 seconds and make sure it does.”
Consider Customer Sentiment
NPS’ age means questions are being asked about its application in a digital world, when technological advancements offer greater insight into customer behaviour.
“All contacts that come into a contact center can have text and speech analytics applied to them,” Weaklend said. “Now, companies can easily identify trends and have verbatim feedback from customers to explain exactly what the problem is. It’s much easier than before.”
“NPS has limited correlation to loyalty and behaviour, and it’s losing relevance with modern audiences and requires a survey, which is why we’re going to keep moving away from it,” — Nate Brown
For Brown, advancing technologies means that companies will begin to move away from the survey-based NPS approach to Customer Sentiment Analysis, a method to process communication- usually text – to assess positive and negative reactions from customers.
“It’s very easy to benchmark NPS and it can be asked at any point along the customer journey. It’s relationship focused rather than transaction focused, and that’s a huge pro. But it’s got limited correlation to loyalty and behaviour, and it’s losing relevance with modern audiences and requires a survey, which is why we’re going to keep moving away from it,” said Brown.
NPS relies on customers answering honestly. Customer sentiment, which is taking the customer experience by storm, is more on point and allows us to collect data in a far more advanced way,” he added.
“If we’re looking at the customer journey then the customer effort metric is far better at showing us correlation to customer loyalty, which is what matters.”