Friday, January 30, 2015

The Pros and Cons of Net Promoter Score

The intent behind NPS is well conceived ... but it is not the magic silver bullet that is necessarily relevant everywhere.
“Net Promoter Score (NPS) measures the loyalty that exists between a provider and a consumer. The provider can be a company, employer or any other entity. The provider is the entity that is asking the questions on the NPS survey. The consumer is the customer, employee, or respondent to an NPS survey.” (Wikipedia). On one side, it is a very popular and well-accepted term to  measure customer experience; on the other side, some worry there are declining relevance of NPS, so what are the pros and cons to measure NPS?


NPS only goes one inch deep, businesses shall dig three-feet in-depth to find the root cause of business problems. Organizations are hiding their inefficiencies behind a good NPS score instead of addressing the real issues that are plaguing their organization. Back office inefficiencies and lack of stakeholder buy in rank top on the list of issues why NPS score is losing its relevance. NPS is so well marketed and has become so widely known that is almost a fashion accessory that senior executives automatically assume it must be good without necessarily really knowing what they are signing up to; or in the other cases, for many companies and consumers, NPS is still a very new / emerging concept, and so many consumers don't yet suffer from NPS burn-out. Either way, many users of NPS do not understand how to extract real strategic value from the system but still go ahead with surveys and/or inappropriate applications at the wrong point in a customer relationship. The 'Recommend Question' is now so widespread that it has become meaningless to the average customer who is staggering under the survey fatigue. The market is moving on continuously.


Customer surveys to measure NPS are not one size fits all, they need to get tweaked or tuned. Customer Loyalty, which is at the heart of the NPS, will always remain key to all;  but sometimes it’s the most short term and exploitative business relationships. The "recommendation" question does not work in all circumstances and may require tweaking or changing with something more relevant. It does though often add significant value. Overall relationship and "touch-point" surveys may require the use of different questions! Gathering data and creating KPIs is the easy part! Once obvious quick-wins have been taken, driving systemic change in the Customer Experience is hard work and often is challenged by other business imperatives which may be shorter term and more easily understood.


The further analysis of interactions with customers is complementary to NPS: Companies want to use NPS to drive operational excellence - but don't get the insights they are looking for to help them decide what to focus on. Do analysis of actual interactions with customers (phone calls, letters, emails, Web chat etc.) - to identify how well and how consistently front line staff are building relationships with customers - and how proactively they are representing their organization. Focusing on helpful and unhelpful behaviours - tone of communication, relevance and clarity of information, acknowledging concerns and rapport building, for example - can be more productive than tracking an overall score only.


The true business optimization is Employee Engagement (EE) x Customer Experience (CX). One issue is that an excessive focus on statistics and an absence of validated evidence that prolonged use of NPS actually delivers continuous economic improvement and so supports sustainability! The other problem with NPS is that it fails to address the reality that customer loyalty is the child of high levels of employee engagement preferably compounded by meaningful community involvement. Human Sigma tells us that true business optimization is Employee Engagement (EE) x Customer Experience (CX) so companies that measure and manage only CX will never discover the full potential that a comprehensive engagement strategy can deliver! The consensus that careful selection of the measures that are meaningful to staff, are worth asking customers and which focus time, resources and attention to fix are what matters.


The intent behind NPS is well conceived ... but it is not the magic silver bullet that is necessarily relevant everywhere. That said, NPS is ultimately just a tool, and like any tool only works if used correctly. Implementing surveys is easy, the hard part is getting people to take meaningful actions based upon what is learned.

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