It’s only a matter of months until the 20th anniversary of the publication of Frederick F. Reichheld’s now famous article ‘The one number you need to grow’ in Harvard Business Review. Summarising the research into the most effective customer satisfaction survey questions that would help to predict company growth, it suggested that the answer lay in asking ‘the ultimate question’ using a scale of 0 to 10: “How likely is it that you would recommend [company X] to a friend or colleague?”
Two decades down the line, there is no doubt that as a metric, the resulting Net Promoter Score (NPSTM), provides a quick and easy way to gauge customer sentiment and has been widely adopted by businesses worldwide. It enables organisations to identify ‘Promoters’, customers with the highest rates of referral and recommendation, through to ‘Detractors’ who were least likely to do so. But is it still the one number you need to know?
We all know that NPS has helped to raise the profile of market research and made it easy for companies to gather customer feedback.
It’s become the bedrock of many customer experience programmes and is easily understood by CEOs and other members of the board. And it certainly gives a useful indication of whether you are providing a positive or negative customer experience which could contribute to repeat purchases, new customers and additional sales.
One size does not fit all
However, in our experience, any issues with NPS are not with the score itself, but rather with how it is used.
It’s important to understand that while NPS is boardroom friendly, focuses on the ‘outcome’ of experiences, links to loyalty and is about the overall holistic experience, it is not about individual transactions.
NPS is influenced by wide ranging and often broader issues than for other satisfaction metrics. Brand strength and perception, product performance, competition, peer review, and past and present service can all have an impact on the final number.
For example, would you recommend on the basis of one call to your broadband provider? Probably not. Would you recommend on the basis of your overall experience with your broadband provider, including their products (speed, reliability, etc), their service (ease of getting in touch if you have a problem) and how trustworthy you consider the brand to be? You might.
The customer is more important than the score
Despite this, NPS is often used to justify incentives or to meet operational or business targets but while this can provide a useful benchmark, it’s important not to obsess over it.
To make the metric work best for business, those involved need to understand what it can and can’t offer, without losing sight of the ultimate goal: the customer is more important than the score.
Key drivers of NPS will show what is done well and what needs to be maintained to keep a strong NPS, but the score by itself has some limitations. It doesn’t provide the detail about why your customers’ might be more or less likely to recommend your company to a friend or colleague.
You still need to look beyond the scores and take into account the verbatim explanations that are hopefully provided in answer to the NPS survey to understand where you are doing well and where you are letting customers down.
In this respect, using NPS to identify detractors can be really useful. According to Bill Gates: “Your most unhappy customers are your greatest source of learning”. It’s not about shifting the blame away from the business to the customer. It’s ultimately about harnessing NPS as a key performance indicator (KPI) to help you improve your ability to retain customers.
Looking beyond NPS
To find out why your customers are detractors, to provide answers and solutions that directly address their complaints and to ‘close the loop’, it’s highly likely that you will need to find the source of their dissatisfaction by asking more than one question.
You’ll need to use other KPIs to leverage additional sources of customer insight – Customer Effort (CES) and Customer Satisfaction (CSat) metrics – to help you learn more about why customers had a bad experience, where improvements need to be made and to hopefully turn critics into fans. For example, CES can help you highlight the weak points in a customer journey, measure how easy you are to do business with and here it is relevant to focus on transactions. CSat is better able to identify those that are ‘moderately satisfied’ and more suited to highlighting the key drivers that will improve a customer’s experience.
To help you get the most out of your entire raft of CX measures, we recommend you keep three things top of mind.
- Find out what matters to customers, and when, and measure that! Key driver analysis can help here. For example, if I have insurance, I don’t really care about it or the insurer until I need to claim so measuring performance and customer feedback associated with the processes or departments involved in managing claims is most relevant.
- Get buy in from the top and communicate it company-wide. Make sure that employees understand what CX means and how to deliver a great experience by disseminating the results of your CX programme and what is expected from employees throughout the organisation so that everyone can learn by sharing best practice.
- Avoid the CX Gap. Identify and reduce any disconnect between the promises you make, customer expectations and the experience they receive. Make sure you know what is working and what could be improved.
So, in answer to our question: no, NPS is one but not the only number you need to grow. Because customer experience is about much more than numbers. Yes, it can provide targets and benchmarks, but it’s the stories behind those numbers and the nuances that can’t be captured by numbers alone that really tell us how good or bad customer experiences are.
If you’d like to hear our thoughts about the wide variety of CX Measurement tools and approaches in the CX toolkit, you can download our guide ‘Putting CX Measurement and metrics under the spotlight’ here.
Written by Nicole Holt, Head of Research