What is NPS? The Complete CX Network Guide
We would all like to believe our customers love us; but do they really? If they do, is it enough for them to buy again?
The Net Promoter Score (NPS) may help you find the answer. Perhaps the most widely known and commonly used metric in CX programmes, often described as the “core metric for CEM (Customer Experience Management)”.
If your customers are not satisfied with the service they’ve received, or they don’t like your products, at best, they will not be repeat customers. At worst, through usage of social media, negative experiences/reviews can be shared and spread like wildfire across the internet. It is undoubtedly in your brands’ best interest to learn, and understand, your customers' opinions and dissatisfaction in order to quickly respond and react to their unhappiness. Remember, good news can also be spread by social media - but positive reviews tend to spread more slowly than negative ones.
Using one simple question; ‘How likely are you to recommend [organisation/product/service] to a friend or colleague?’ you can subsequently gauge whether a customer likes your company enough that they’re willing to tell their friends about it. But this leaves industry leaders contemplating; just how realistic or trustworthy is the NPS score?
What is Net Promoter?
An attractive aspect of NPS is its simplicity. Based upon one straightforward question, your customer gives a rating out of 10 for how likely they would recommend your brand to a friend. Your customer is then grouped into three categories based upon the score; Promotors (score 9-10), Passives (score 7-8) and Detractors (score 0-6). Subtract the percentage of Detractors from the percentage of Promoters to yield your Net Promoter Score, which ranges from low (-100; if every customer is a Detractor) to high (100; if every customer is a Promoter).
As the creators, Bain & Co describe; any NPS score above 0 is ‘good’. “It means that your audience is more loyal than not.” Anything above 20 is considered “favourable”, above 50 is excellent and above 80 is “world-class”. (But these are only general guidelines, you mustn’t forget to factor-in the industry and the country in which you’re based. More on this later).
Let’s look at the three categories of customer;
- Detractors are easily identifiable as ‘unhappy customers’ who have the potential to ‘damage your brand and impede growth through negative word-of-mouth.’
- Passives are recognised as satisfied, but somewhat lacking in enthusiasm and could be vulnerable to competitive offerings.
- Promoters are your loyal enthusiasts. You can trust them to keep buying, refer others and fuel growth.
Implementing a good NPS Strategy
You’ve got a score from your customer - now what? This is where many businesses fail to utilise and monetise their NPS score, leaving many questioning the validity of this metric. But what if the question were not ‘should we use NPS?’ But rather, ‘how should we use NPS?’ If you’re not analysing, dissecting and empathising with your customers, and their feedback, how could you possibly understand their journey with you, the reasons for their score and how to target improvements?
The CX Network’s 10 steps for NPS effectiveness:
- Teamwork: “converting unenthusiastic customers into loyal promoters will require a group effort and the best ideas come from the unlikeliest of sources.” Get your executives and staff on board. They need to understand the process by which you are going to approach, target and rectify customers’ issues. Plan the steps that you are going to take to respond to each category, whether it be to carry on incentivising promoters with the ambition to encourage them to become advocates, push passives to become promoters or how to save your brands’ image and perception of detractors to stop them from negatively spreading their potentially harmful opinions. After all; ‘a chain is only as strong as its weakest link.’
- Identify customer contact and touchpoints. Create your journey map to discover the experience your customers have with your business. This may include a visual representation drawn from rich data to where your customers come in contact with you, on or offline regardless if it is ‘transactional’ or ‘relationship focussed’.
- Use a CX Management Platform or NPS software. Allowing you to generate a ‘comprehensive view of your customers, keep track of all the interactions your company has with your customers, both current and potential. You can also use NPS data to see which touch points have high NPS score, and which have a low NPS score.’
- Understand what drives customer loyalty. What influences the behaviour and feelings of your customers providing feedback? For your promoters, it may be worth conducting a more in-depth post-survey follow-up to ‘clarify feedback and strengthen the customer relationship’.
- Make sure you have a ‘closed loop system’. As stated by People Pulse: “Front-line, middle management and senior management is required to have an effective closed loop system. Front-line staff such as customer service, technical support and sales play a key role in developing promoters and neutralising detractors. Middle managers provide performance coaching and know how to manage excellent customer experiences. Senior managers help create and provide appropriate systems for recognition, communication and ensure the NPS results remain in line with strategy deployment.”
- Diving in: Once steps have been completed, you can send customers the NPS question, at a planned and researched, relevant touchpoint. Conducted most often at the point of purchase or soon after. This helps make your customer feel listened to and offers an opportunity to express their excitement in the moment (capturing the high) or, in the case of negative interaction, offer them the release to vent frustrations before heading to social media.
- Find out the reason behind their choice of score. Do this by following up the initial question of ‘how likely are you to recommend us’ by sending a free, specified question: ‘What is the primary reason for your score?’
- React to feedback. Ask, ‘how can we make your experience better?’ This gives your customer a chance to suggest what you can do, giving insight into their expectations.
Make sure to only ask how to make their experience better if it’s relevant; if their low score was due to ‘long call waiting times’, you’ll already know the action is to shorten wait times. If you ask questions to already disgruntled (and sometimes happy) customers or ask for too much interaction you will frustrate them. They want to move on with their day, especially if they’ve been kept on the phone for too long. “Adding a follow-up question will open the door to valuable qualitative feedback and voice of customer research. But you also can’t neglect user research, including usability testing and other common conversion research techniques,” says Alex Birkett, from CXL.
- Keep generating data. One customer’s feedback from one point in time doesn’t necessarily reflect their relationship with you past, present or future. Competitors are competing for your customers, offering shiny new deals and offers, you must keep customers interested and your CX outstanding by communicating with them to know exactly how they feel about you. Patrick ‘Mad’ Mork speaks of the frequency; “Run it often enough to track the changes you’re making to your product but not so often as to annoy your users. Best practice is usually quarterly though I’ve seen games companies run it as often as monthly when they’re making frequent changes to their mobile apps.”
- Engage, respond and encourage your customers. Humans are lazy. It doesn’t matter how much they love your brand or product, if you make it too tiresome to share positive experiences - they won’t at all. If you make it straightforward and easy, chances are they’ll be more interactive. Provide incentives, encourage social media reviews and comments, but tread carefully around ‘paid-reviews’. “If your customers feel appreciated and know they matter, they are much more likely to go out of their way to promote your brand.”
As People Pulse state: “Making the right improvements based on the feedback of your customers can help turn passive and detractor customers into promoters and increase customer loyalty and profitable growth.”
Improving your NPS score
Tomas Dickson, Director of CX at Perceptive believes that “it is often the most simple things letting a business down. Pick up the phone faster, reduce wait times, and, in general, just communicate better… Don’t make your customers come to you. Go to them.”
CX Network’s Adam Muspratt has discovered that some businesses are trialling new methods of NPS scoring by applying it at a micro level at various stages of the customer journey. This is done by allocating “various teams (marketing, warehouse, etc) with their own NPS score. This gives more accountability and ownership for points of friction in the complete journey.
Turning promoters into advocates
Loyal customers are your bread and butter. Let’s take Apple and their retention rate for the iPhone in 2017 - 92% compared to only 77% for the Samsung Galaxy. “Your existing customers are the most profitable for the company.” Marketing costs decrease as costs rise to acquire new users. They’re most likely to recommend you to a friend, promote your brand and giving them love will incentivise new customers to join; that’s NPS in action.
The downsides to NPS’ validity
NPS allows for a common language to classify customers, has a correlation with increased business growth and is a terrific benchmark for measuring competition, as it's used worldwide. However, experts have their reservations; it’s not specific enough on its own, only captures one specific moment in time and without a plan in place to act on results, nothing will come of the data you’ve collected. NPS doesn’t provide enough data on its own to base decisions, that’s why it’s inherently vital to follow the steps we have created above.
NPS is valuable for capturing magic moments, and conversely, detracting feedback. However, a huge amount of customers fall into the passive category. Commentators have argued that to some extent, NPS de-values that relationship with passive customers and makes it hard to get to the bottom of their issues in the long run.
As Caroline Jarrett (author of Forms That Work) expresses; “there are some things...where you’d never recommend it to a friend because you don’t do recommending, and certainly don’t do recommending of those types of things… you might be very enthusiastic about the product, but you might not feel the urge to recommend haemorrhoid cream to your pals… that’s not giving a true measure of the value of that product.”
The debate of culture: As mentioned by Rob Markey (Bain & Company Partner): “some cultures...use response scales differently. In some Asian countries, few customers are rarely willing to use the top end of any scale. In other countries, customers use the extremes, but don’t use the middle often. Comparing absolute scores in this instance is nearly impossible.”
What if your customer is just having a really bad day? They might personally attack your brand and score you more harshly than it ordinarily would be. NPS is only a snapshot in time, equally, just because a customer might recommend your services, doesn’t mean they won’t leave you for a better deal. “We live in a hyper- competitive market where products and services are improving more quickly than they did in the past, consumers are better informed and information is more open and available than ever. Point is, you have to keep working to earn your customers’ trust every day” - Patrick ‘Mad’ Mork.
Can you rely too much on your NPS score?
Many organisations can fall into the trap of thinking that as long as satisfaction is being measured, there isn’t much else to do. However, organisations should start thinking about why something is being measured. Indeed, metrics are there to start to tell a story, but you need to be aware of their limitations and understand what the numbers aren’t capturing
It can be dangerous for CX programs to solely rely on one metric as this may not provide the full picture. To only use a metric such as CSAT your gage is only impacted by those who are spending, but the satisfaction and opinions of those failing to spend or leaving your business fall through the cracks.
Ingrid C Lindberg –CEO and Founder of Chief Customer emphasizes that it is important to make sure movements in your customer index or metric actually correspond to the reality. This is needed in businesses that have relatively healthy satisfaction and NPS levels but still suffer from concerning customer churn rates and plummeting sales. This set up in some cases has led to the demise of businesses.
In order to untangle this strange dynamic, teams should measure customer sentiment using tools such as text analytics to discover signals that indicate what is actually making customers leave your business. Once you uncover these pain-points, instead of focusing on NPS scores use these stumbling blocks as your main employee metrics. This method will ensure your brand is improving the factors that are of real value to customers and influential to their retention.
Stephen Hewlett, CCXP & Alex Birkett, CXL advertise the importance of consistently meeting your customers' needs: “The score alone will not tell you if you are meeting your customers’ needs, and more importantly which ones you are not meeting.” "[this can result in a] dangerous habit that could eventually turn loyal promoters into detractors.”
As Jeff Sauro from MeasuringU says, “despite its problems… the NPS works fine as a measure if you understand the shortcomings and make some adjustments.”
NPS at its minimum just won’t cut it; it’s too simple. It doesn’t account for the time, culture, environment, product or analysis of mass data. It is imperative to use it purely as a base - not the bible. Jennifer Derome explains that you must combine the NPS with user research to improve your customer loyalty.
Understand what lies behind your user’s score, don’t just take it at face value.