When Reichheld introduced NPS®️ i.e. Net Promoter Score in Harvard Business Review in 2003, companies quickly adapted it either as an independent customer satisfaction metric or included the question to a broader customer satisfaction survey. NPS score was one of the first steps towards customer-centric service culture. Now that customer satisfaction is the hot topic of every business, NPS index is receiving increasingly more critique along mere praise. That’s why it’s a good idea to list the strengths and weaknesses of NPS and consider how to use NPS in the most possible way.
NPS strengths:
NPS is easy to use and to understand. NPS index is easily understandable and it’s easy to implement. NPS is based on asking one single question and the NPS score is calculated according to the answers. The score tells how likely customers would recommend the company/service/product to their friends or colleagues. The question can be asked by itself or a part of a broader customer experience survey.
NPS score is a legitimate customer loyalty metric. Even though NPS is just a quick snapshot of the customers’ current experience, it’s an easy indicator for management to track if the customer experience and satisfaction are going in the right direction.
NPS is easily comparable. Because the index is standardized, its results are easily comparable between business units and services or to competitors or the industry average.
NPS score is shown to correlate with business growth. When you want to grow your business, customer satisfaction has a surprisingly great impact on your success. According to research, customer loyalty predicts customers’ future behaviour most accurately and high customer satisfaction is the most accurate business growth predictor.
NPS simplifies staff motivating. The simplicity and comparability of NPS score makes it easy to commit staff to improve customer experience by keeping track of their NPS score.
Engaging customers becomes easier. NPS groups customers according to their loyalty and thus it’s easier to focus suitable actions to both satisfied and unsatisfied customers. It’s easy to make passive customers into promoters and if detractors’ bad experiences are attended quickly and appropriately, they too can be turned into promoters.
NPS weaknesses:
NPS doesn’t provide enough information and understanding. Mere NPS score doesn’t provide enough tools to improve business, it only measures customer loyalty. If NPS question is asked with follow-up questions according to the given answer, it will provide a deeper understanding of why the customer gave a certain answer and how to improve business if deemed applicable.
NPS is only a metric. Relating to previous item, NPS requires a strategy to be useful in the business development. In itself it doesn’t provide a direction for the company, it only measures customer loyalty. If there is a plan to manage customer experience, NPS can be a metric to track its success but it doesn’t give directions.
Monopoly position distorts results. Even if NPS was measured in a remote small town’s health clinic and the customers were very unsatisfied, but there wasn’t a competitive service available, customers would still have to return over and over again. On the other hand, customers can be extremely unsatisfied with a company but for example significantly lower prices force them to come back yet again.
The wording and scale of NPS: The word “recommend” can be difficult to understand. The service may be fully functional, and the customer satisfied, but what does it actually mean to want to recommend a service? Different people may interpret the question differently. In addition, the NPS scale is 0-10, which is, for example, a different scale than the Finnish school grading system. For some, the “I don’t know” option is in the middle of the scale, for others, it may be, for example, a score of 8. The scale may appear differently to different individuals.
The NPS metric score alone does not provide enough information for business development and growth. However, it is an excellent and popular metric as part of a broader effort to improve the customer experience. Measuring the customer experience helps guide your business toward a better customer experience.
