Net Promoter Score: Why It Isn't Enough

By Janet Jaiswal, Sr. Director of Product Marketing —

What is the Net Promoter Score?

Many companies use Net Promoter Score (NPS) as an indicator of customer loyalty. At the first annual Customer Experience Professionals Association (CXPA) conference, I discussed the use of NPS with many of my colleagues in the Customer Experience space. I found that many of these companies were dissatisfied with NPS. It seems that while many organizations will continue to use NPS, they feel they need to do much more if they are to reach their goals for deliver a great customer experience. From my conversations on the topic, here were some of the shortcomings attendees cited.



Why are Some Companies Dissatisfied with NPS?

"It is a lagging indicator," a Customer Experience colleague explained. Most companies measure NPS once a year and some particularly industrious companies two times a year. If they have a positive NPS score (certainly if it's above 50), they have cause to celebrate. However, many complained that a good score simply meant that they did well in the past year (or at the time the customers filled out the survey) but what about now? They felt that they had no idea if their customers were currently satisfied or dissatisfied and if they would continue to stay loyal.

In other words, they wanted real-time data about the customer experience they provide. Otherwise, how would they know if the changes they made (such as a website re-design or, say, adding a chat feature to their customer service capabilities) had a positive or a negative impact on their customers?

Another common complaint was that to obtain any meaningful insight from the NPS score meant undergoing the painful task of digging through the customer comments to put meaning behind the scores. Each time some new insight was gleaned, it meant re-reviewing other customer comments one at a time to re-interpret the data. Imagine the amount of time you would have to spend if you have hundreds if not thousands of surveys to analyze.

Another source of dissatisfaction with Net Promoter Score was that it sampled a subset of users who are highly variable quality-wise. The sample of customers could reflect biases of the team that selected which users to invite or the bias of the selected customers. Only those who were very dissatisfied or very satisfied tended to complete the survey.

Finally, environmental factors may also influence customer responses to the "recommend" question—making comparisons across business units or industries difficult in certain cases. Also, comparing businesses with a social stigma such as online dating or cigarette manufacturing and companies with different levels of service fulfillment (e.g. delivery services as compared to an athletic gym) is difficult to do with NPS. Critics pointed out that determining when the survey should be delivered may be more obvious in some cases than in others, such as in the case of an athletic gym, where customer attitudes are more likely to change over time.

At the end of the day, Customer Experience professionals still have a goal to move customers from satisfied to loyal and from loyal to advocates. Find out in next week's post how CX professionals can achieve these goals.

Comments

[ComptonScotty]

I fundamentally disagree with rationale for dissatisfaction with NPS described above. Firstly, the view that NPS is only a lagging indicator is incorrect. There are two ways to measure NPS: transactional and relationship. Transactional NPS captures customer feedback immediately after each interaction and fives direct customer feedback in almost real-time. The issue raised of having to 'dig through' customer data for insight is bewildering. The real value of NPS is it captures valid customer feedback, which can be acted on to improve customer experience, provided it is handled in the right way. Data samples can be misleading for any customer sat measure, it simply means more care needs to be taken to ensure sample sizes are valid and checked regularly.The comparison issue applies to all CSat measures. The real value of NPS is inter-industry comparison, i.e. being able to compare all telecos or all banks based on one question is hugely valuable.