My Closing Thoughts On Net Promoter January 29, 2009
Posted by Bruce Temkin in Customer experience, Net Promoter.Tags: ACSI, Fred Reichheld, Jessica Tsai
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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.
[...] be sure to check out My Closing Thoughts On Net Promoter, by Bruce Temkin and Companies Share Their Net Promotor Experiences on this blog. bookmark [...]
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
Hi Deborah: It was a great event, thanks for having me. The ROI research is really valuable; NPS users should definitely check out that link.
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/
[...] gives a very insightful account of that presentation here. Bruce has added some final thoughts on his own Customer Experience Matters blog, describing how the one ultimate question aligns within his model as part of relationship [...]
Bruce,
Well said — don’t be a score whore – there’s LOTS of work to be done!
Cheers!
D.
The last question is extremely valuable – aligning senior executives with your efforts. That is one of the only ways to get things done.
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.
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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this post is good, it can help me.
Thanks you
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?
Cameron: I regularly speak with clients (of Forrester) about Net Promoter, but I don’t have a presentation to distribute. The best I can offer are my blog posts that deal with Net Promoter.
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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.