Would you recommend the NPS metric?

by Guest Contributor Mark Molenaar | June 05, 2019

Author: Mark Molenaar

Mark Molenaar
Director, Customer Experience
Kantar
https://www.linkedin.com/in/mark-molenaar-82b6057/


The Net Promoter Score has been in the news lately and it has as many supporters as detractors, yet continues to grow in popularity. Recently one of our clients asked, would you recommend NPS? My answer was it all depends on what you want to use it for.

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NPS is the popular choice because it is widely accepted, is relatively simple (one number), easy to understand and communicate and is defensible (everybody else is using it).  And it gives an indication that the business is listening to the voice of the customer. However, when talking to people who actually use it, differing levels of frustration are voiced, ranging from inconsistency in results, lack of explanation for movements, to lack of any real guidance on actions to improve the scores.

There are good reasons why some people might find that NPS is not be as reliable as they might want. Perhaps two of the most important are as follows:

Margin of error

First, the way NPS is calculated by subtracting one score from another increases the margin of error. This might sound a bit geeky but the implications are important. Unless you have very large and representative samples this can cause NPS scores to be erratic, moving up and down from one measurement cycle to the next. Imagine the embarrassment of congratulating staff for a quarter on quarter improvement only to see that improvement evaporate the next quarter. By contrast, a composite index which captures two or three key dimensions of the customer relationship would be more stable.

Generalised sentiment

An article by Don Peppers reports how senior executives had their bonuses reduced based on an incorrectly interpreted decline in their Net Promoter Score. On closer inspection, it was clear that the NPS measure was tracking the National Consumer Confidence figures.  This means that changes in NPS (like many performance metrics) might sometimes have nothing to do with your efforts and more to do with prevailing sentiment.  Benchmarking how you are performing compared to how your customers see competitors can help take other factors out of the equation and focus on what is most relevant.

The popularity of NPS is unlikely to diminish anytime soon, and if properly used to measure performance over time can be useful (although I would urge caution in using it as a metric to reward people). However, perhaps its biggest weakness is when it comes to deciding what strategy will best improve customer satisfaction. Using just NPS is going to leave you guessing where to invest for the best return.

But what do you think of NPS? Please share your thoughts.

1 comment

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  1. Aditi Garg, June 06, 2019

    When companies use NPS as a diagnostic tool or as a tickmark to investors and internally,it loses its purpose. It is when it used as an outcome metric that it is most useful,since it helps track how Customer experience efforts are doing. 

    The beauty of NPS is in realising its true potential and making it work in conjunction with other metrics. 

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