July 9, 2015 Leave a comment
Every couple of years, I get a resurgence of questions about Net Promoter® Score (NPS®). These surges typically coincide with research that shows how NPS is either an excellent predictor or a terrible predictor of company performance. That data often ignites a religious battle between the NPS lovers and NPS haters.
Well, it’s one of those times.
Let me start by saying that I’m an atheist in this NPS battle. We’ve had the opportunity to study and work with hundreds of companies that use NPS. I’ve recommended to some companies that they adopt NPS, to others that they stop using NPS, and to others that they start with a totally different set of metrics (see our VoC/NPS resource page).
Let’s look at what we know for sure about NPS…
- NPS is not the ultimate question. Despite the claims, there is no single question that you can ask customers that will make companies customer-centric. Even the most ardent of NPS adopters gather feedback from customers using a lot of different questions.
- Promoters are more loyal than detractors. We’ve researched the difference in loyalty between promoters and detractors across 20 industries, and in all cases promoters are much more loyal.
- NPS is popular and mostly successful. In recent research we found that 71% of large companies are using some form of NPS, and two-thirds of those companies say that it’s had a positive impact on their organization. Only one metric is more popular: satisfaction.
The reality is that the metric itself is much less important than how it is used. I’d rather use a sub-optimal metric in a way that drives positive improvements across an organization, than have a perfect metric that doesn’t result in as much impact.
Here are some quick answers to key questions:
- Is NPS the best indicator of customer loyalty and business performance? In many cases, no.
- Can other metrics be used to drive positive change? Yes.
- Does NPS provide an easy to understand metric that can be widely adopted? Yes.
- Can NPS be used to make an organization more customer centric? In many cases, yes.
- Will a company improve if it increases promoters and decreases detractors? In many cases, yes.
- Can NPS be used inappropriately? Yes.
- Can any metric be used inappropriately? Yes.
- Would I ever recommend NPS for every touch point? No.
- Should companies consider their specific business when selecting metrics? Absolutely.
- What’s more important, the metric or the improvement process? The improvement process.
The bottom line: NPS is neither a savior nor a demon.
P.S. In case you didn’t know, NPS® and Net Promoter® are registered trademarks of Fred Reichheld, Satmetrix, and Bain & Company.