If not NPS, then what?

Previously, I looked at the pros, and cons, of NPS as a tool for measuring your organisation’s CX. Today, having slain the dragon, I’ll try to help you rebuild the tatters of your CX life and identify what you should be doing if not NPS.

What was the problem again with NPS as a measure? A good question, I’m glad you asked. To recap, NPS is usually a very broad metric of customer response to a specific question and, as such, it bears little relation to actual business performance. Just because Company A has a higher NPS than Company B, you’d expect it to be… what? Larger? More profitable?

That’s clearly not true. BT Group has an overall NPS of around 15 and yet is a larger company than 3 (NPS of 27) or Vodafone (60). Similarly, BT TV has an NPS of 13 yet has far smaller reach than Sky (-5).

As an industry, telecommunications is ranked 16th out of 20 for NPS, lower even than Insurance (32 v 54 overall) and yet it remains a profitable industry.

To understand how to measure CX, we must first understand the impact it can have on a business. To do this, let’s look at some statistics:

  • 42% of B2C customers purchase more after a good customer experience
  • 52% of B2C customers stop buying after a bad customer experience
  • 24% of customers continue to use a vendor for more than 2 years after a good experience
  • 39% continue to avoid a vendor two or more years after a bad experience
  • 87% of customers who have a good experience will share the story with their friends (just under half via social media)
  • 95% of customers who have a bad experience will share the story with their friends (over half via social media)

So the picture starts to build. For starters, the underlying trend and business impact is that a good CX will lead to customers buying more, becoming loyal, repeat consumers and encouraging their friends to do the same.

And it seems that the negative consequence of a BAD experience is greater than the positive effect of a GOOD experience. Getting things wrong will turn more people against you for longer, whereas getting things right will impress fewer people and for less time. Some statistics suggest it will take twelve positive experiences for a company to recover from the impact of a single negative experience.

A good customer experience, then, is not an end in itself, it’s a means to a well performing business. The measure of a good customer experience is the measure of a successful business. And that has always has been about financial performance:

  • what is the churn rate of your customers?
  • what is your ARPU?
  • what is your share of wallet?
  • what are your customer service costs?
  • what is your underlying profitability?

If the purpose of a good CX is to have a financially successful business – and the way to achieve financial success is through good CX – how is this achieved? Again, there are a number of statistics about what customers want from a business, for example:

  • 69% of customers attribute good customer service experience to quick resolution of problems
  • 89% of customers get frustrated if they have to repeat their details to multiple representatives
  • 75% of online customers expect a response within 5 minutes

But here is where the real work comes in. Not all companies are the same. They don’t all target the same customers, or customer segments. Their services are not all identical. It is vital to understand what YOUR customers want from YOUR company, not what theoretical customers want from a theoretical supplier.

There are two key questions:

  1. How is your customer experience defined?
  2. Does it meet what your customers expect from you?

Defining a Customer Experience

Some companies are (arguably) today a brand before they are a vendor. An Apple fanatic is very unlikely to switch to Android unless something very drastic happens. An Omega watch enthusiast is unlikely to give it all up and switch to Tag Heuer just because of one bad experience. The driver of a Jaguar won’t switch to Dacia without a significant change in circumstance. But an environment like this is a rarity and one that is earned over a long period.

More relevantly, a quad-play telco customer who follows Premiership football is unlikely to switch to a provider without TV & sport offering

Apple, Bentley or Omega’s customer experience is far more than a single transaction. It’s more, even, than a full user journey from identifying a need, through purchase to ownership and in-life service. These brands have earned that status, built that customer experience, through a combination of their product, its price, knowing what their customers want and having processes in place to deliver it. In some cases, like with Jaguar, this reputation will keep the company going even when the product itself falls below the established, and expected, standard.

The quad-play customer won’t be watching Everton v Huddersfield on a Sunday afternoon just because of Sam Matterface.

Which leads on to:

What your Customers Expect From You

Your customer experience is a result of everything your company does, not just how much you charge for delivery, or how fast your call centre responds. It includes the company’s products, prices, processes and – increasingly now – its social responsibility position.

Apple, Jaguar or Omega customers don’t buy them because they are cheap. Xiaomi, Dacia and Casio customers don’t buy them because of the great after-sales service and reliability.

While statistics like those, above, can provide general trends on what customers want to see, to feel they are getting a good experience – no successful corporation sets out to provide slow fault fixes to customers or intending that issues have to be handed off to multiple agents, or to offer a poor service – it is important to understand how your customers see you and what they want from you, in order to be able to offer the right customer experience.

Talk Talk Group make few bones about being a value B2C telco. There is not a high degree of automation in their back office and it’s recognised that their customer service can be slow. They tend not to compete on high bandwidth services to consumers.

Real sport fans have, traditionally, taken Sky subscriptions and Sky capitalised on this to offer quad-play telco packages, adding mobile, fixed and broadband. BT Consumer has lived on its position as the “monopoly” (or Universal Service Obligation) supplier to try to appeal to everyone – starting with traditional telephony and recently entering the TV and sport market. It’s products are relatively expensive in the marketplace and this is not always reflected in the services received. This has allowed other players to steal a march on fibre broadband (Eg City Fibre) or mobile (Three, Voda) or content (Sky and now new entrants like Amazon or Netflix). And yet BT has several million residential customers.

Perhaps this is reflected in their relatively low NPS. And for TTG, they remain a significant player, despite an NPS of -30.

Understanding the expectations of their customers is a key business driver for both of these companies. No company can afford to watch their financial results decline, irrespective of their NPS score’s trend, and then start to ask the question of where they are failing their customers.

Next time we will look at how true CX insights are achieved and how this can be used to drive business transformation.

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?