Is Net Promoter Score Right for You?
Executives in 45 percent of organizations use Net Promoter Score (NPS) as a customer experience (CX) beacon metric, according to a recent Forrester Research survey. But is NPS the right CX beacon metric for your firm? Lots of CX pros ask us this question, whether their companies have been at CX transformation for a while or are just getting started.
Assess the merit of NPS by asking yourself these five broad questions.
1. Is NPS a leading indicator for achieving your organization’s goals?
Does NPS predict customer behaviors that drive important financial and other goals? Does NPS help you understand whether you are delivering on your CX promise?
Too many companies skimp on answering the first question. But your promoters might not be the customers you want. A company might find that promoters were customers who got higher discounts; managing toward NPS in that case would mean managing toward losses! Try conducting a pretest: Measure NPS for a subset of customers and collect financial and behavioral metrics for these same customers (e.g., revenue, cost to serve). NPS could prove useful if promoters perform considerably better on those metrics than detractors.
When it comes to delivering on the CX promise, though, NPS is less useful since it’s not really measuring that.
2. Does NPS contribute to improving CX?
Do changes in Net Promoter Scores reflect changes in CX performance? Does NPS help identify who needs to do what in order to improve CX?
As noted, NPS doesn’t really measure CX; it measures loyalty. Factors other than experience can affect NPS—like advertising campaigns, public scandals, general industry trends, etc. As a result, NPS can be but isn’t always a good proxy for CX. And while some firms succeed, others have found it hard to identify CX improvement opportunities based on NPS.
3. Does the NPS question make sense to customers?
Can key segments relate to the question text? Do they feel valued when they see the question? A question on recommending a retailer or car rental provider makes sense to most customers. But customers of firms that operate as monopolies (think utility) or that deal with a group of specialized customers (some B2B situations) might wonder whether you are out of touch with their reality by asking that question.
A typical survey request stresses how much a firm wants feedback to improve. But then the firm starts the survey by asking the customer to do something for the firm (recommend), an awkward start to a conversation that might make customers feel less valued—especially if they keep getting surveys without CX improvements.
4. Does NPS rally employees and executives around CX?
Is NPS easy for employees and executives to understand? Does it create a common language for employees and executives? Does it tap into issues that employees and executives are passionate about? Is it easy to use for benchmarking?
NPS fares well on the first two questions, but there are mixed signals regarding the passion NPS incites. Some employees and executives love it and some find it too abstract. Benchmarking NPS is typically possible, either through external benchmarks or by fielding double-blind studies.
5. Is NPS practicable to measure?
The answer is yes if NPS incurs low implementation costs and requires little implementation effort, and if it meets any regulatory requirements
WHAT SHOULD YOU DO NOW?
Tally up your answers across all questions—you can assign a 1 for “no,” a 2 for “somewhat,” and a 3 for “yes.” If your average is between 1 and 2 with several no’s, NPS might do more harm than good. If your average is between 2 and 3, NPS could be what you need. But we still recommend you check into other possible beacon metrics to see if they fare better in this assessment. Alternatives include open-source metrics like satisfaction or retention; proprietary metrics (like Forrester’s CX Index); and custom metrics like indices that track delivery on CX promise or a calculated CX performance score based on the performance scores of CX drivers.
Remember: Always question why NPS is being put to the test. Is there a new leader who doesn’t like NPS (or are you one yourself)? Are you revisiting NPS because your firm’s CX transformation has slowed down? If so, it’s likely you’ll find NPS is as good as other potential metrics, which means you should spend less time assessing NPS and more time ensuring your CX transformation is a success.
Maxie Schmidt-Subramanian is a principal analyst at Forrester Research who serves CX professionals. Follow her on Twitter @maxieschmidt.