Is NPS really worth measuring?

A conversation with a colleague this week triggered a number of thoughts.  The colleague’s client wanted NPS (net promoter score) to be implemented across the account.  I guess the important question to ask is why does the client want to use NPS?

Before answering that question, it’s probably worth refreshing ourselves on how NPS works.  You ask a single question, “On a scale of 0 to 10, how likely are you to recommend X?”. Some businesses will also add a simple “Why?” after the question.  Scores of 9 & 10 are advocates, 7 & 8 are passive, 6 to 0 are detractors.  Subtract detractors from advocates to calculate your score, from -100 (bad) to +100 (exceptional.)  Businesses around the world use this metric as the high level indicator of loyalty, satisfaction, engagement, retention, advocacy.  But in fact, it’s a little more complicated than that.

NPS comes in two forms – transactional and relationship.  If you are looking to do an annual, monthly or quarterly survey to assess a customer’s relationship with us / their pension — you’ll need to implement relationship NPS.   This is easier to roll out and manage, but only gives a pulse or snapshot of how customers are feeling with minimal context. It works well for cyclical customer journeys where you are running a mature operating model.  It’s great for looking at a long term view, and tracking change over extended periods of time. It’s also a good way to spot weak relationships, especially for B2B.

If, like my team, you are looking to carry out a targeted survey after an important events or transaction (for example, an interaction with your customer success team), you’ll need transactional NPS.  This is more laborious, but much better at showing how your customer feels during the course of the customer journey, allowing you to focus on pain points and magic moment in the journey.  Because transactional NPS is event-triggered, it’s easy to map against your customer journey, so very useful for new businesses or new products.  Whilst you do need to be careful to avoid survey fatigue (by asking your customers for transactional NPS scores too often), this is the best way to track change over the short term.

One of the biggest opportunities that businesses miss is leveraging the responses that customer share in “Why?”  they chose the score.  This rich source of customer sentiment is invaluable in both transactional and relationship data – it tells you what they love and hate about your experience, thus outlining the changes you need to make to drive up loyalty, advocacy, growth and competitive edge.

Personally, I feel that NPS, whilst better than customer satisfaction, is still flawed, and in transactional customer experiences such as banking, utilities or government services, I’d look to use customer effort score (CES) as a better indicator.  Below I’ve included a couple of previous posts that might help you understand this topic in a little more detail.

Linking what you measure to what your customer team delivers

The 4 most useful metrics to use (including NPS & CES)

Factors to consider when deciding the best way to measure customer engagement

Advanced methods for tracking customer engagement

So back to the client – it would appear that they didn’t really know why they wanted to implement NPS – so this felt like a great opportunity to educate the client on not just what to implement but how to use, creating a greater partnership based on meaningful metrics and actionable data.  By working with the client to understand their desired outcomes, not just the scoring, we are able to add considerably more value.

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