Wednesday, August 19, 2015

Is Net Performance Score a KPI?

A true NPS score will take into account many aspects of a typical customer engagement.

Net Promoter Score, or NPS, acts as a leading indicator of growth. NPS measures customers’ overall experience of your brand. ( 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? Is Net Performance Score a KPI?

A true NPS score will take into account many aspects of a typical customer engagement (sales, service, return policy, billing, follow-up, tech support, etc.); and therefore a typical employee will only have influence on one or a few of the many aspects that go into an NPS. NPS scores tend to be more strategic rather than tactical and so therefore shouldn't drastically change on a quarter to quarter basis unless there is a full process by the company on a particular issue or concern. Look at the average NPS score and, also, the calculated score. Small sample sets can create a highly fluctuating score, but tracking the average score can show subtle changes. For example, the NPS this quarter is 10 and the average score is 7. Next quarter, NPS is 11 and average score is 7.7. NPS only changed by 1 but average score rose 0.7 points. That rise in average score is important because it shows incremental growth.

NPS can provide you with valuable information, but it does not eliminate the need to understand WHY a customer is either a promoter or a detractor. Using NPS as an individual KPI is fraught with danger and can be counter-productive if it is not understood well what the customer is really answering, and what they are telling you. It is also important for companies to examine two other issues with using NPS as an individual agent level KPI. First ask yourself what the customer is telling you. No matter whether you put "based on your recent interaction with our Customer Service Dept" at the start of the question, when a customer is asked if (s)he would recommend your company, their answer is going to be based upon the entire experience, not just one call. Many factors will weigh as heavily on the score they give the performance of one CSR. Second - listen to what the customer is telling you. If they are dissatisfied with other elements of the service, then these are what needs to be fixed.

Focusing on the customers, first and foremost and getting them to a superior state of satisfaction will bring the renewal and a higher NPS. NPS alone is volatile, especially for small volumes of data. It needs to be bolstered by other operational or product feature metrics. Even as a customer satisfaction rating, it is rather limited in providing a comprehensive review about the overall operation. For instance, a low NPS may be driven by a very specific operational/product feature and a simple change in that can drive higher CX. But if you are not measuring that via specific metrics/text analytics, then moving NPS will be difficult and resource intensive at the very least. There are many other metrics that can be used before looking at NPS that are easily accessible, but often not utilized. Once these other metrics that reflect engagement (absenteeism, employee turnover, productivity, wastage, on time deliveries etc) have been understood and actioned, then NPS does provide a position on ultimate output - the customers who are advocates of your business.

There are pros and cons to using NPS as employee performance metrics. The great thing about putting NPS on all employee performance metrics is that it has a unifying sense that we all have to do our part and that we are all part of one singular vision and goal. Just be sure to continually communicate this as often as possible to individuals and the company at-large. However, using the NPS for employee performance could be unfair in some cases. While NPS could be used as a corporate measure, it will not provide a good indication of employee's performance. Better and fairer to gauge employee performance on things that are within their influence, rather than a number they have only a component of influence. This is why it makes more sense to gauge senior management on NPS rather than the typical employee. Also, to jump to NPS too early will mean a lack of appreciation as to the other elements that contribute to it. As we all know, to build engaged employees, they need to feel that they are helping to co-create the future success of the business. Jumping to NPS without dealing with the other metrics first will lead employees feeling disconnected and not involved. Metrics can drive the wrong behaviors. Irrespective if they are NPS, Sales, or whatever. Ensure your employees are displaying the right behaviors, and the improvement in the metrics will follow. To manage employee performance effectively, you have to think both on an aggregate as well as an individual level. NPS is a great metric for overall customer experience. It does, however, not tell you how your individual team members are doing compared to each other and where your areas for improvement are to make sure your NPS rating stays at the right level. You need to keep looking for continuous improvement both at team and individual level, otherwise your NPS will certainly suffer. The hardest part of the NPS system as a performance KPI is employee participation. There are so many front level employees do not understand why they need a "high score." NPS is a valuable system when used correctly, but companies must use the information to improve their service and they must educate their employees as to WHY the company needs the information, not just to increase employees participation but to improve overall moral. You need to have a component of an individual's performance based on KPIs that they have direct influence over, have a portion that is based on the team's performance, and lastly a component that is based on company performance. The individual would always have an eye towards their part in the company's goal ( improving NPS), but since metrics like NPS is affected by many factors, the low percentage means they will not be negatively impacted if the score is low due to another area of the organization. To be clear, the percentages would change depending on the role. As an example, a VP/Director level would have a greater percentage applied to the company performance. But more importantly, to inform the business as to which forward-looking decisions will have the greatest impact on the future of the business, you need to tie meaningful satisfaction scores to future behaviors. Predictive measurement of employee engagement is what drives actionable improvements.

NPS as loyalty measurement is leading indicator that will direct all KPIs as one direction. To implement NPS as KPI should be followed with defined other lagging indicators for Key Customer Business Process. There is nothing wrong with using it as a KPI: it doesn't have to be and should not be the only performance measure, that's all.


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