NPS is broken - here’s how to fix it
If you’re taking your Net Promoter Score (NPS) in isolation as a metric of success or failure, you’re not only letting yourself down but your board and customers too.
NPS is a standard metric for most marketers. But while you believe the acronym to stand for Net Promoter Score, your board and senior management are likely to think differently.
Net Promoter Score? More like Not Particularly Satisfying.
Why? Because when marketers across the globe use NPS as a way of measuring customer sentiment without layers of significant context, it’s little more than a vanity metric with significant flaws.
Rolling back your NPS
OK, just so we’re all on the same page, here’s the 30-second NPS lowdown.
It’s a way of measuring customer satisfaction with a single question: “How likely is it that you would recommend our company/product/service to a friend or colleague?”.
Customers are asked to rank on a scale from 10 to zero: if they give you a nine or 10, they’re promoters (yay!). Zero to six are detractors (boo!).
Take away your detractors from your promoters, and you have your NPS. (Anyone scoring you seven or eight gets thrown out. They’re passive – no use to anyone.)
Any score above 50 is considered excellent, while generally anything above zero is positive. After all, more people like you than don’t.
Our NPS is up! High fives team
The quarterly NPS results are in, and we’re up. Job done? No. Sorry. Job started.
NPS can be a valuable metric – it’s a good insight into how customers perceive you at that particular moment.
Proponents cite ease of use, its ability to transcend industry and sector, and the fact companies across the world use it – enabling significant benchmarking.Critics say it’s based on a positively phrased question with too much emphasis on most-recent experience.
There’s also a great deal of difference between words and actions, and only 13 per cent of people who say they would recommend you actually do.
So it’s a neat gauge of current sentiment. But from a business perspective and in terms of profitability, it’s actually pretty meaningless.
Why you need to delve deeper
The need for marketers to demonstrate dollars coming back into the business has never been greater. A recent survey of the Fortune 1000 C-suite found that 96 per cent of top executives view their marketing and PR teams as “unwilling or unable to prove ROI”.
The study, by performance analytics firm Proof, found that many business leaders still strongly believe in the impact of marketing but struggle with the failure of their marketing team’s lack of accountability in illustrating their business value.
Just as a marketing team that points to its campaign material or awards cabinet as proof of success, if you’re just reporting your NPS, the question you’ll likely be asked is ‘So what?’.
Much like email opens and click-through rates, your NPS is an indicator that you are (or aren’t) on the right track. But that’s all it is. Until you get more insights – ultimately showing impact on the bottom line – NPS should be filed, with your open-rates and click-throughs, under V for vanity.
Getting more from NPS
The biggest flaw with NPS use is the (bitterly disappointing) lack of context.
A free-text comment box can expand the scope of NPS and allow customers to explain their reasoning.
Find out what you have done that was so good that they’d have no hesitation in extolling your virtues – these people who would recommend you to a friend or colleague, why would they do so?
Likewise, find out what you have done that’s left those customers who would never recommend you feeling so negatively,
Across the board, a simple question that provides great insight is ‘Why have you given that score?’.
Why don’t marketers do this? Because of the time it’s historically taken to turn that ‘free comment’ data into insight and then action. Well, to those marketers we say ‘welcome to the future’ – tech will do the heavy lifting.
But don’t stop there. Overlay your findings with further data – for example, demographic information and customer history – and suddenly insights that can seriously fine-tune your operation from the top down become apparent.
These insights can help you identify which audience segments offer the greatest growth opportunity as well as improve your customer experience.
And deliver significant ROI.
So the next time you are tempted to report your NPS, ask yourself the question: So what?
Rest assured, your CEO and board are asking it too.