I do believe that the industry should spend less time debating NPS and more time deploying action-driven CX programmes that link to the bottom line. Although I realise I’m contributing to (and maybe fuelling!) the debate through this article…
Nearly two decades have passed since the creation of the Net Promoter Score and as we enter 2020, I’m still amazed by all the hype around it, both positive and negative. It’s the marmite of the CX world – apologies if you're not familiar with marmite – but basically it’s a “love it or hate it” situation. Not much room for a middle ground.
I was surprised that so many conversations I had with CX professionals centred on this topic in 2019. I didn’t think there would be much left to debate. When it was created by Fred Reichheld in 2002, various caveats came out relating to its effectiveness. However the title of Reichheld’s book, “The Ultimate Question” and his article in Harvard Business Review, “The One Number You Need to Grow” might have led to the impression some took that the CX Crystal Ball had been invented. A straightforward equation, free for all to use, subtracting Detractors from Promoters, through a single question, as you can see below. What could be simpler!
How likely is it that you would recommend Company X to a friend or colleague?
But the simplicity of the metric hides a great deal of sophistication around:
what it takes to grow the One Number. The Net Promoter approach is based on a set of best practices and economic models that many “NPS” organisations still fail to follow today;
how it helps businesses rally around the customer. By offering a system that inherently segments Promoters, Passives and Detractors, it can make a real difference when it comes to taking the right actions to achieve bottom-line outcomes, like preventing churn;
how the model correlates the “Likelihood to Recommend” question to actual customer loyalty.
I can almost hear the cries of indignity from the NPS Detractors reading this article. As I mentioned I’ve had quite a few chats about NPS in recent months, so I’ve tried to summarise - and offer my perspective on - the key arguments CX professionals tend to raise (especially on the Research side).
1. Too simple
Compared to some of the extremely complex and often proprietary CX metrics out there, NPS is calculated based on a single question so it's often viewed as "too simple". But it should ALWAYS be accompanied by more questions to help the organisation understand how to take action. At the very least, a second “Why” question is needed, preferably unprompted (no drop-down list provided as it could bring bias and sometimes error). Plenty of technology solutions out there offer text analytics capabilities so you can translate all the mess in the open-ended “Why” answers into valuable insights… And don’t hesitate to add 3-4 questions as well if needed. But for goodness sake, always keep it as short as humanly possible and only ask questions you know you can use to link insights to actions… And ROI. I’m afraid, in the end, NPS is definitely not simple, if you do it right.
2. Not predictive enough of loyalty / growth
Technically the linkage between CX metrics like NPS and outcomes like loyalty and growth needs be customised to every business. That’s the only way to be truly predictive. It makes sense that Promoters in your specific business might not show the same propensity to buy again as claimed by industry leaders. You might find your Detractors churn less than you’d expect (good for you!). In my experience NPS makes it easier to calculate your specific linkage. But if a different metric/model fits better with your strategic goals, then you should absolutely use it. Bear in mind it might not be as widely used so it might be harder to benchmark your company against competitors, and to figure out how to segment your customer base as intuitively as the NPS system. And I’m afraid to tell you, no metric will ever offer crystal ball capabilities. Shame, I know.
3. Not action oriented
Well I’m afraid this issue is common to all metrics, or rather it’s linked to the belief that measuring something will automatically lead to action and change. How simpler life would be! I would be able to lose weight just by checking my bathroom scale as often as possible. But no, that’s not how it works and although we all instinctively know this, it’s astonishing how many organisations out there still focus on building great CX programmes that listen accurately to the Voice of the Customer, and track whichever CX metric they’ve chosen, but still fail to take appropriate actions across the business. Crucially the majority of these organisations don’t even attempt to link specific actions back to the CX metric and ALSO to financial outcomes. NPS (the system, not just the metric) represents one of the more efficient CX methodologies when it comes to focusing your organisation on the right actions to take, and to linking these actions to outcomes.
4. Not for my company / industry
Well, you might be right! This doesn’t reflect badly on NPS, but like all metrics, it fits certain industries better than others. For instance I’m still surprised to get an NPS survey from my doctor’s office, or the tax office. I can see why they do this, and these types of organisation wisely offer a slightly amended “Recommend” question. I do hope they’re able to put NPS to great use when it comes to understanding customers better. Saying that, some industries should absolutely consider more suitable metrics and models – I can think of a few examples: monopolies (like government agencies), pharmaceuticals, funeral homes… Maybe an overall satisfaction question, with associated “Why” and key contextual questions, might do the job better? Also it’s worth noting that NPS doesn’t quite work the same way for B2B and B2C. And NPS can be more adapted to understand overall customer relationships rather than individual touchpoints. I don’t think these perspectives are necessarily a deterrent, as long as you always compare apples to apples, and keep an eye on trend lines.
5. Just a fad
That’s an easy one… It’s been around for 20 years and is used widely across various industries and regions. And it shows no signs of disappearing anytime soon, despite rumours to the contrary. Most references to the “fad” notion and the fact NPS “doesn’t work” could be talking about most metrics. So I won’t spend much time on this argument…
The choice of a CX metric should be given proper consideration at the start of any programme. Regardless of what you decide, you should bear in mind that NPS and all other metrics share similar issues:
they just measure… Customer segmentation, action management, financial linkage still require hard work, for CX professionals and the entire organisation, in order to move the needle - whichever “One Number” you’ve chosen to grow.
their predictive nature is fickle and complex. You need to calculate it for your specific business to be accurate, and keep evaluating your model on a regular basis.
their associated methodologies (like the Net Promoter System for NPS) should be the real focus, with the metric a mere indicator that what you’re doing is working… or not.
I do believe that the industry should spend less time debating NPS and more time deploying action-driven CX programmes that link to the bottom line. Although I realise I’m contributing to (and maybe fuelling!) the debate through this article…
Regardless of any negative chatter out there, and some of the “doom-and-gloom-of-NPS” articles I have read, I'm still convinced that NPS represents one of the better systems available to measure and improve customer experience. The fact that it’s not a crystal ball, or a magic bullet, with the ability to grow all by itself and generate revenue automatically, well, that’s just common sense.
But if you do know of a CX magic bullet out there, please share…
NPS® and Net Promoter® are registered trademarks of Fred Reichheld, Satmetrix, and Bain & Company.
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