Is NPS the right measurement to understand your business performance?

Let’s talk about Net Promoter Score for a moment, shall we? First, let’s just make sure we’re all on the same page – a definition:

NPS, at its core is a calculation of customer responses to a question, typically something like “How likely are you to recommend <thing> to a friend or colleague?” with answers being on a 1-10 scale.

To get your NPS score, you take the number of “promoters” – those rating either a 9 or 10 – and subtract from it the number of “detractors” – those rating at 6 or below. You then end up with a score somewhere between -100 (all detractors) and +100 (all promoters).

So, there we go. Simple. Contact your customers, ask them how likely they are to recommend you, do the maths and wear your NPS score like a birthday badge if it’s good, or bury the results and make lots of announcements about how you are now “seeking to be a customer-focused organisation” if it’s bad.

Good work everyone, double espressos all around, back to the day job.

Or not. Hopefully. To really understand the experience you’re offering to your customers, is NPS enough? Can it be more than a headline number? And, if not, what are the metrics that really matter when trying to understand your customers’ experience of you.

For starters, it’s worth acknowledging that NPS can be measured for different things within a company. The Brand level is where many organisations focus and where many industry reviews will begin and end. At this level, NPS probably is little more than a birthday badge – who has the biggest number; whose is the most popular brand.

Transactional NPS works at the level of an individual interaction. As a customer you’ll have experienced this after an online chat request, when your support agent asks you to complete a survey asking whether they resolved your issue. At this level, you can start to build an impression of which interactions and capabilities work well in your organisation.

But At any level, NPS is not without problems. A few observations:

  • Are all 8/10s equal? For me, 8/10 may be a really good company – one that I’m very happy with. After all, 80% is an A-grade in most examinations. Everyone has room for improvement somewhere, but you’re good enough. Yet, according to the method, this only makes me a “passive”; I don’t contribute to your NPS score. Catch me on a bad day (one which may not even be your brand’s fault) and I might be inclined to only rate you 6/10, even for the best outcome. That makes me a detractor. So, my view of why I have given you the score I did will be personal to me and influenced by my context and circumstance
  • What you mean to me may also influence how I response to the NPS question. Honestly, if I find myself in a position where I’m talking about mobile phone packages, or haemorrhoid cream or accounting software, let alone having to make a recommendation to a friend or colleague, I’m going to want to re-examine my choices in life. So the fact I’m scoring you 5/10 doesn’t mean I don’t like your product or service, it just means I don’t want to be the sort of person who discusses the relative merits of Wifi extenders.
  • Why do I like/dislike you? And here we start to reach the core of the problem with NPS: What is my reason for giving you the score I did? Maybe your product is OK, but your customer service is bad. Or you’re a good company but your products are just too expensive (or a lousy company with cheap products).
  • Context is king. If I’m buying a product, especially one that I’m excited about like the brand new smartphone, I’m likely to be really happy with any sales process that lets me buy it, unless you really screw it up. If I’m querying an error on my 5 page phone bill, or trying to find out why my “upto 40Mb” broadband line is only getting 17Mb, I’m unlikely to be delighted with the outcome unless you can work some magic.

You could argue that these factors balance out: the people having a bad day and marking low are cancelled out by those having a good day and marking high. Or you could say that these factors will apply equally to every company, so you still end up with a valid way of comparing your company’s performance to your competitors’.

However, what you do not get out of an NPS score is a good vision of the business functions in your company that need to change and how they need to change to make you an industry leader, or even a better company.

Coming up in part 2… If not NPS, then what should we be measuring?