My Closing Thoughts On Net Promoter

I had planned to do one last post about the Net Promoter Conference in San Francisco to recap my session. But it turns out that Jessica Tsai from CRM Magazine did a great job capturing it in her article called “The 5 Levels of Customer Experience Maturity,” so read her article if you want to hear about my session. One thing that she didn’t mention was a quote I used from Ghandi (in addition to the quote from Morpheus that she mentioned in the article). How often do you get to hear a blending of wisdom from Morpheus and Ghandi?!?

So, rather than recap my session I’ll share my thoughts on the Net Promoter movement. Some of this is captured in my post about Fred Recihheld’s speech and the subsequent comments on that post. But I decided to vet my thinking in a Q&A format. So I will ask and answer a series of questions:

Q: Where is Net Promoter Score (NPS) at in its lifecycle?
I’d say NPS is entering early adolescence. The excitement and exuberance of a single measure for customer loyalty is giving way to some second guessing and rethinking. Companies are learning that it’s not as easy as just using NPS, it takes hard work to figure out how to best use NPS to improve customer experience. The NPS conference, though, was at the right level. Rather than promote the greatness of the NPS metric, Recihheld led the charge around figuring out how to use it as a catalyst for change.

Q: There’s been a lot of debate about the value of NPS, is Net Promoter a good thing?
Yes, absolutely! Despite the mistakes and drawbacks of NPS, it has been enormously successful at catalyzing the attention of senior executives on the issue of customer experience; it’s made customer experience relevant to the executive suite. And one of the best things about NPS, which doesn’t get enough attention, is that it has introduced a common language around customer segments: Promoters, Passives, And Detractors. The use of common vernacular is a very powerful tool for aligning organizations.

Q: What have been the biggest problems with NPS?
NPS has been marketed as the “ultimate question” and the single metric you need to run your business. While this has been an important part of its success in garnering attention, it has led many practitioners to misunderstand its true value. The key value of NPS is not as a metric, but as part of an approach for improving customer loyalty. NPS’ role is to segment good outcomes (Promoters) from bad outcomes (Detractors) so that the company can diagnose the drivers for each of those situations. This only becomes valuable when the company uses this insight to change what they do so as to create more good outcomes in the future.

Q: Could another question work just as well?
Yes, I believe that there are other questions that could also work as a diagnostic. For financial services and health care firms, a question around customer advocacy could work. At Forrester, we’ve tracked customer advocacy by asking consumers how much they agree with this statement: “<Firm> does what’s best for me, not just what’s best for it’s bottom line?” Also,  satisfaction questions can work. As I’ve said in the past, any company that can institutionalize processes that create more satisfied customers and creates less dissatisfied customers will do well.

Q: Are there places where an NPS question doesn’t work?
Yes, there are many places where the net promoter question isn’t appropriate. I always discuss voice of the customer efforts (of which NPS is a part) in the context of five levels of insight: Relationship tracking, interaction monitoring, consinuous listening, project infusion, and periodic immersion. NPS fits nicely in the relationship tracking bucket, but is not a good fit for the other levels of insight. Satisfaction questions actually work much better for interaction monitoring.

Q: It sounds like satisfaction can be a useful concept, why doesn’t it have the same “buzz” as NPS?
Fred Reichheld. The excitement about NPS was created by the energy and dynamic nature of Reichheld. While satisfaction methodologies have been around for a lot longer time than NPS (see theacsi.org), they lack a spokesperson who is as persuasive as Reichheld. Through a combination of his HBR article, books, consulting, and speaking engagements, Reichheld has created “the buzz” around NPS.

Q: What should companies using NPS do going forward?
First of all, get everyone in the company to use of the three labels for customers: Promoters, Detractors and Passives. Then, make sure that you shift your thinking form “tracking” NPS to using it as part of a diagnostic approach for improving customer experiences. You should create the following endless loop: NPS identifies Promoters and Detractors, diagnostic analysis identifies what separates those outcomes, change the experiences for customers based on that insight, and then create more Promoters and Detractors, and then NPS identifies Promoters and Detractors, etc.

Q: How do you keep executives aligned with these efforts?
Executives will (and should) only keep focusing on NPS (or, more correctly, customer experience improvements) if they see business value from those efforts. So NPS practitioners should work with their finance teams to build models that show the value of creating more Promoters and decreasing the number of Detractors. Without this clear connection to financial results, it will be hard for companies to continue to invest in this area. This type of insight will help executives understand that creating Promoters is a fundamental part of their job. And, finally getting to my quote from Ghandi:

All compromise is based on give and take, but there can be no give and take on fundamentals. Any compromise on mere fundamentals is a surrender. For it is all give and no take.

The bottom line: NPS has great potential, but the results are up to you.

About Bruce Temkin
I am a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, I examine strategy, marketing, interaction design, customer service, and leadership practices. I am also a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Simply put, I am passionate about spotting emerging best practices and helping companies master them. And, as many people know, I love to speak about these topics in almost any forum. My “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Our goal is simple: accelerate the path to delighting customers. I am also the co-founder and chair of the Customer Experience Professionals Association (CXPA.org), a non-profit organization dedicated to the success of CX professionals.

23 Responses to My Closing Thoughts On Net Promoter

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  2. Deborah Eastman says:

    Bruce, Great characterization of the power of NPS. Thanks for attending our conference, your session was valued by our attendees. In case you missed Vince’s presentation on the economics of NPS, your readers may be interested in the framework we have developed to assign a financial value to Promoters & Detractors. We’ve done this for the credit card, cellular and B2C hardware industries. They are offered on our website at: http://www.satmetrix.com/satmetrix/resources.php?page=212

    Let’s continue the conversation.
    Deborah Eastman, CMO, Satmetrix

  3. imptwo says:

    I attended the Net Promoter Confernce in London in 2008 and sensed the changing (should I say maturing) of the messge then. Bruce, I totallly agree that the creation of a common language to talk about customer segmentation has been a great part of the success.

    Also, the fact that NPS is rarely seen to be ‘owned’ by a single department – the initiative often coming from CEOs that read Fred’s book on a plane journey! – gives it much greater organizational power.

    Inspired by this, I have written about some different maturity models here:
    http://responsiveenterprise.wordpress.com/2009/01/30/is-5-or-8-or-7-the-magic-number-and-not-1-after-all/

  4. Pingback: Is 5 (or 8 or 7) the magic number - and not 1 after all? « Responsive Enterprise

  5. Bruce,

    Well said — don’t be a score whore – there’s LOTS of work to be done!

    Cheers!
    D.

  6. The last question is extremely valuable – aligning senior executives with your efforts. That is one of the only ways to get things done.

    • Bruce Temkin says:

      Thanks for the comment Aleksandar. The people who put down Net Promoter because of its simplicity miss that point. It’s better to be aligned around a sub-par metric than unaligned around a perfect one. But, as I mention in this post, it takes more than the worshop of any single metric to get business results.

  7. Nick Fox says:

    Thanks for this Bruce.

    I fits completely with our view of the merits of NPS. Being an exec in charge of this I get a lot of benefit from the simplicity of the concept at it’s ability to engage my peers and the rest of the organisation. I am sure as we move further along, it will not be enough, and we will need to supplement it with other approaches. Regards Nick

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  9. Pingback: Chubb Turns Me From Promoter Into Detractor « Customer Experience Matters

  10. friehey says:

    this post is good, it can help me.
    Thanks you

  11. Cameron says:

    Do you have a presentation that we could all use to help get this information in to the hands of more people who are not yet bought in?

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  19. Mickey Freeman says:

    Great discussion on the power of NPS. We have found that adding the vernacular of NPS has been a key step in our road to improved customer experience. It is more important than one might think. Secondly, when that happens everyone in the customer experience loop begins to focus on what they can do to induce change. Initially they are trying to change the score but eventually they see that change in the experience has other rewards. Another step that was key to making NPS work was proving the link to financials. This caught the attention of senior management and helped move the discussion into practice.

  20. Sven says:

    Hi!
    I fully agree that it is the actions you do to improve the customer experience that matters the most and not how you measure the progress but that don’t justifying the hype of NPS as the most effective metric. Many studies have showed that the metric have many flaws and I just can´t see how it how it is simpler to use, simper to answer or easier to understand than overall customer satisfaction.

    I have read a great deal of arguments for and against NPS and I must say I have trouble to see in what way it is a better metric then metrics on customer satisfaction. Sure NPS have Promoters, Passives, and Detractors as buzzwords but I am sure that management would be even more interested in the percentage of satisfied and unsatisfied customers. That doesn’t even need any explanation to anyone. That sound way simpler to me than NPS where you have to know the calculation of it.

    Reicheld said (according to your text above) “You just need to use a question that categorizes customer into those that are passionate about your company and those that are not”. The question of willingness to recommend has value as a metric to follow (even if actual behavior is better it is hard to capture) but, as pointed out by several studies, the question is not the most effective in measuring if the customers are satisfied, loyal or even to what degree they give positive or negative recommendations. So if you are to follow just one metric why use willingness to recommend instead of a question on overall customer satisfaction? It is surprising that researchers and clients still don´t see that there are better and simpler metrics that should be used if you just want to have one single metric.

    Reichheld himself even admitted that the question is “simply irrelevant” in certain markets and sectors according to a quote I saw. I have trouble thinking of any market or sector where the question of overall satisfaction would be irrelevant. There have been argument that the NPS system is great but I am sure that the system would be even better if it as based on a question of overall customer satisfaction used as an mean value or index.

    And if the willingness to give recommendations I important would it not be better to ask the respondent the question in the context of them being asked to give a recommendation like:
    “If you were asked by a friend or colleague to recommend a “X” company, how likely is it that you would recommend us? That way the respondents don’t have to think about if it is plausible that he/she would give a recommendation at all, and you would have a better indication if the respondent is passionate about the company or not and that way it would work better between markets and sectors as one tend to talk more or less about different types of services.

    I would be glad to hear some thought on this.

    /Sven

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