9 Recommendations For Net Promoter Score (NPS)
June 16, 2011 13 Comments
This week is the Net Promoter Conference in London. Since these events often spur a ton of questions about Net Promoter Score (NPS), I put together one of my periodic posts about NPS. If you’re not familiar with NPS, it’s based on asking customers a question like this:
How likely are you to recommend <COMPANY> to a friend or colleague?
Respondents are categorized as “Promoters,” “Detractors,” or “Passives” based on their answers. The Net Promoter Score (NPS) is calculated by subtracting the percentage of Detractors from the percentage of Promoters (Passives are ignored).
My take: Let me start looking at NPS with some data points from the report, The State Of Customer Experience Management, 2011:
- 48% of large companies (more than $500M in revenues) are using NPS
- 67% of those using NPS report positive results (15% say it’s too early to tell)
- 84% of large firms with voice of the customer programs (including those that use NPS), report success from those efforts
NPS can be a valuable metric, but only when incorporated within a strong voice of the customer (VoC) program. Here are a handful of overall recommendations about NPS:
- Stop dreaming about an “ultimate question.” Having worked with dozens of organizations on their NPS efforts, I can tell you that the NPS question is not nirvana. Even the most successful users of NPS ask customers a series of questions and get feedback through a portfolio of mechanisms.
- Look for magic in the “why.” To some degree, it’s useless to know if someone is likely or unlikely to recommend you if you don’t also understand why they feel that way. So you need to make sure customer feedback helps you understand why customers feel the way that they do. Which leads to my next recommendation…
- Focus on improvements, not questions. Feedback is cheap, but customer-insightful actions are precious. The goal for any feedback mechanism (like NPS) is to drive improvements in your business. Successful NPS programs have strong closed-loop VoC programs that go from detection of customer perceptions to deployment of improvements (see my post about the 6 Ds of a voice of the customer program).
- Don’t lose sight of segments. An overall NPS score across your customers may be a good metric for aligning focus across the company, but it’s not very diagnostic. A good VoC program needs to track this type of data across key customer segments and understand which interactions (“moments of truth”) are driving those scores.
- Understand the elements of experience. When it comes to making improvements, you need to understand the three core elements of any experience: Functional, Accessible, and Emotional. A good program needs to provides insights into how customers perceive each of these elements.
- De-emphasize the “N” in NPS. NPS improves by eliminating Detractors or by increasing Promoters. but those changes can also offset each other. So the “netting” of the scores removes important clarity. Companies need to look at the rise and fall of Promoters and Detractors independently, since the changes needed to affect these areas are often quite different.
- Tap into the power of the language. There’s a lot of data to suggest that other measures such as the ACSI’s satisfaction index are as good as NPS (many people argue that it’s better, but I don’t want to enter that debate). What sets NPS apart is the wonderfully clear language around “Promoters” and “Detractors.” Make sure that the education across the company focuses heavily on those terms.
- Build a strong VoC program, with or without NPS. The overall program is more important than the choice of a metric like NPS. So make sure you focus on building a strong VoC program whether or not you use NPS (check out our VoC resource page).
- Remember, this is a long-term journey. Companies can make short-term improvements with superficial changes, but long-term success requires institutional capabilities. Start by understanding the 6 laws of customer experience and create a roadmap for building four customer experience core competencies: Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness.
The bottom line: Successful NPS implementations require strong VoC programs
About Bruce Temkin, CCXP
Customer Experience Matters® 
Fantastic summary Bruce – I agree with everything. In fact I have had to iterate and re-iterate many of these points to my leadership team over the last three years!
Bruce, fascinating stuff, thank you for this.
Your ‘magic of why’ point is essential to the success of any VoC programme. I believe that actionable customer insight is the only insight that counts. Gathering NPS data, or any other, rarely changes anything for the customer unless the “why” is understood in real-time. We advocate asking one of a number of questions of customers in a way that allows them to respond in real-time, and takes up as little of their time as possible. As Seth Godin said of surveys, “every question you ask is expensive in terms of loyalty and goodwill” Questions such as “how are we doing for you?” and “how did you feel about…?” are critical to gaining swift actionable insight. NPS, Customer Thermometer or any similar approach should always focus on the “magic of why” above all else.
Bruce,
I could not agree more. Having built up a VoC program for a multichannel retailer, I can say that these are many of the hard truths that we learned over that process.
Great post Bruce!
“Stop dreaming about an “ultimate question.” We have been saying this for a very long time. Many of our customers initially approach us to implement a “Net Promoter Score” program. One question. That’s it. We urge them to look deeper and measure beyond just willingness to recommend. The focus is on identifying what’s “driving” advocacy and customer behaviour and this requires a more in-depth approach—one that provides meaningful and actionable insight necessary to drive improvement to customer experience and operations.
The key, as you point out so often is “insight AND action”. They go hand in hand. NPS is certainly not the panacea many make it out to be. That’s not to say that NPS is of no use. Far from it. There’s no debating that that customer advocacy is a key ingredient to success and a good measure of customer relationships, but unto itself, NPS yields very little actionable insight.
Ricard pridham
President & CEO
Agility Metrics Inc.
Bruce,
These are all great points. I think you hit the nail on the head when you mention the importance of having a VOC program set up before you focus on a metric like NPS. We all to often see companies focus all efforts on their NPS score and gear compensation and goals on this score. Unfortunately a number moving around doesn’t really tell you what your customers think about you.
The real information will come when you expand past “Will you recommend” to an open ended question that allows the customer to comment. The real actionable information is in these comments where sentiment and verbatim customer thoughts are recorded.
Loving your blog. Thank you for the post.
Allen Bredeson
http://www.service800inc.com
Hi everyone: Thanks for your comments. NPS is so widely used, yet so widely misused and misunderstood. Hopefully we can change that…
Bruce,
Great post as usual. I fully agree with your findings especially that people need to stop debating exactly if the metric is useful and focus on all the positives that come from starting and NPS program. Our clients have very similar results to what you are talking about and I echo a wholehearted “Yes” to your points
Right on, Bruce! In determining actionable insights into customer experience or engagement, there can be no one single ‘ultimate question,’ or magic metric for that matter. In developing a proprietary engagement measurement system and algorithm, I do use NPS, but it is one among many insightful questions. The simple definition of experience or engagement differs to customer (or prospect) groups based on where they are situated in their relationship with the company/brand. Therefore, there must be different metrics in place to unearth the insights supporting the experience and engagement.
Thanks for bringing to a head these points and for clarifying the misunderstood.
Keith Wiegold
Chief Engagement Evangelist
Nutlug
I absolutely agree with Ian’s first comment about Bruce’s blog on the Net Promoter Score being one of the best summaries for how the NPS, if a company decides to use it,…. Should be just one of many ways to evaluate the voice of the customer. I was listening to a panel discussion a few weeks ago, where a Fortune 100 company said, they had a global customer satisfaction measurement process in place. And, then they told the audience that they just ask the one NPS question. I was thinking to myself….some one at a very high level in this company, doesn’t really understand the true value of customer feedback. Richard Shapiro, The Center For Client Retention
Bruce, I’ve yet to read anything you’ve written that I didn’t get a keen insight. Keep u the good work. Jill Griffin
I can’t find guidance on this practicality anywhere and you seem like the man to ask… when deciding when / how to ask the customer the magic question, is user-initiated NPS feedback as valid / just as good as system-prompted NPS feedback? Or would you expect one to be higher? My feeling is that people are generally more motivated to complain than to praise so one might expect user-initiated NPS average to be lower than a system-prompted NPS. Can you shine some light on this please? Thanks for the post.
Ben: You have good instincts. People tend to provide unsolicited feedback when they’ve had either a good or bad experience; very few give feedback when they had a mediocre experience (relative to their expectations). In our research report “How Consumers Give Feedback” we showed that more people give feedback after a negative experience then they do after a positive one. So in terms of NPS, an unsolicited score would be overweighted on Detractors and underweighted on Promoters and terribly underweighted on Passives.
Bruce:
Even a couple of years later, this is still a great list.
For more up-to-date info and a perspective on how the Net Promoter SYSTEM is really more important than just the Net Promoter SCORE, I’d encourage your readers to check out the resources Fred Reichheld and I have created to support The Ultimate Question 2.0 at http://netpromotersystem.com.
While we are really gratified that so much value has created by the Net Promoter Score’s radical simplicity, we’re also concerned that many companies fail to understand the importance of incorporating the customer feedback into a more comprehensive feedback, learning and action system. The most important reason for simplifying customer feedback to its essence in the form of the Net Promoter Score was to inspire action and to enable feedback to become an operational element in the business, not merely market research.
Keep up the good work, Bruce!