How important is the Net Promoter Score?
I remember having a conversation a few years ago with a senior manager of a telecommunications company who declared “our happiest customer is the one who has a fault and then rings us” I challenged this at the time, “surely a happier customer is one who doesn’t have a fault”…… apparently, I was wrong, because the Net Promoter Score (NPS) told him this..
Is this right AND, should this drive our actions to improve our customers experiences in the future?
This has stayed with me over the last few years and I have been largely sat in silence trying to understand this further and exactly:
How has the NPS measure become so widely adopted?
What should it be used for vs. what is it actually used for?
For those of you who are unfamiliar with the measure then:
The Net Promoter Score (NPS) measure:
It is an index ranging from -100 to 100 that measures the willingness of customers to recommend your company’s products or services to others. It is to gauge the customer’s overall satisfaction with your company’s product or service and the customer’s loyalty to the brand.
Respondents are grouped into 3 buckets
- ‘Detractors’ gave a score lower or equal to 6.
- ‘Passives’ gave a score of 7 or 8.
- ‘Promoters’ answered 9 or 10.
The actual Net Promoter Score (NPS) is determined by subtracting the percentage of customers who are detractors from the percentage who are promoters. What is generated is a score between -100 and 100. This is called the Net Promoter Score or NPS.
E.g. if when surveyed, all of the customers gave a score lower or equal to 6, this would lead to a NPS of -100. On the other end, if all the customers were answering the question with a 9 or 10, then the total Net Promoter Score would be 100.
Let’s consider this hypothetical situation, I am definitely not suggesting you start scoring the ‘office brew round’.
Whilst you are reading this you may have a cup of your favourite hot drink in front of you, So:
Have you ever had a cup of tea or coffee made for you by a colleague in the office, on a post it they write down each person’s choice or they try and remember it, before heading off to the kitchen to get to work.
Think about how likely you are to recommend them to make a cup for your friends and family? What score would you give them out of 10? And, what could they do what that score if you told them a few days afterwards?
What kind of things would you consider when scoring?
- Was it too hot or cold?
- Was the cup only half full (I’ve had a few made for me like that, who had the other half?)
- Did it take too long to arrive?
- Did it get spilled on your desk?
- Was it too strong or weak?
- Was it in your cup or one of the emergency ones from the cupboard?
- Did they write your order down or remember it?
- Did they smile when they asked you?
If everybody who had a brew made for them by the same person scored, this would give that individual an overall NPS score, BUT, what could they actually do with that??
- If this was the only person who made a brew and got scored – How do you know what a good score is?
- Where would you/they look to target improvements? Trying to get someone who scored a 1 or a 2 to a 6? Is that a good improvement? It may be? but they are still a detractor so would not affect your NPS.
Ultimately the above example is to get you to think about when and where to use NPS or any measure, this example is over simplified but hopefully you understand what I am saying.
I don’t want you to think I am using this post to beat up the NPS metric, I genuinely believe it does add value BUT, it has to be used correctly.
Some positives about NPS
- It is a common cross sector metric that may allow you to benchmark across individual sector and wider
- It is easy to read – apparently that’s one of the main reasons for its popularity, I would argue that simplicity has also driven its misuse, due to the lack of actual understanding and people just try to improve the number any way they can!
- It provides insight – yes it does
- Its an overall measure of the brand – but not necessarily based on a single specific experience
- A higher NPS generally correlates with growth and revenue
Why do we use NPS?
Why do we use NPS. This is a question I have often wondered and on a recent LinkedIn post of mine, it was also asked by a contributor, in my experience I have witnessed reason(s) for its use as:
- A competitor has publicised their score so you need one
- You need a measure for your CX programme
- You want to drive your CX strategy with customer insight
- You need a customer focussed measure for an individual’s bonus
- Because you think it’s the right thing to do
Whatever the reason it has been chosen to be used, it should not be used without knowing what you want to get from it!
Please answer me this, is your NPS measure divorced from operational reality? i.e. how much knowledge of the work do we understand or need to understand from your score? If you have ‘not a lot’ then could NPS drive leader’s decision without a true understanding of the operational issues? – Should they go and ‘get knowledge’ to support this?
Therefore truly understanding ‘why’ you are measuring and what you want from any measure is key!
Do leaders use NPS to drive the right behaviours?
Ultimately it depends on how you are using the measure as NPS is a measure of customer advocacy. So, a Net Promoter Score can and will give the Board and other teams an idea of the level of loyalty someone feels toward their product, service and brand.
I know some companies who reward individuals based on a Net Promoter Score, but is this fair for the individual? People confuse it for Customer Satisfaction when NPS is whole company measure……….Can individuals influence all the things customers perceive as their experience?
What we need to remember, NPS is measure of all of us, it is not really a measure of the individual personally….
There is an easy way to tell if someone is bonussed on NPS, situations like this occur:
Just before I finished writing this article, I had an issue with my broadband, at the end of the call the advisor said:
“Lee, you may be asked to complete a survey at the end of this call is there anything I have done that would prevent you from answering a 10”.
My reply “just asking that question”. Silence and an apology followed before we ended the call.
I would say this is and there are other examples of bad practise. If you gather data this way how can you use it to drive the right behaviours?
NPS like most metrics are driven top down until they reach they actual worker. This results in them having to develop their own improvement strategy and the actions come from this, but are they the right ones??
How should you set up when using NPS
NPS if not used correctly can point you towards addressing an issue after it has failed, it may not point you towards the initial failure. So, what can you do to make measuring NPS successful?
As NPS is based on an opinion after the event from a %age of the population about their future intent to do business with you again. This measure by itself is not usable to drive improvement without some critical steps being put in place first, I would suggest:
- Understand your organisations purpose
- Understand who your customers are
- Have clarity on the leaderships reasons for implementing a measure and what they want to achieve
- Align your strategies incl. Employee Engagement strategy
- Understand how you will get to the specific things that need to be acted on from your NPS score i.e. the root causes
If you currently measure NPS, how many of those 5 things do you have in place?
So, in summary:
NPS is a gauge of advocacy which allows for benchmarking and strategic positioning. But, to shift the dial operationally there are more granular measures that can identify the specifics needing to be worked on, and, Ultimately – Without the right buy-in and reasons for any measure you will really be up against it to make it successful!
About the author:
Lee Houghton is a Management Consultant for Lean Consulting. His 12 year multi sector background has provided him the opportunity to develop his approach of both CX & Improvement best practise to deliver real results.