NPS score and its strengths and weaknesses
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. In the beginning of the century, customer experience measuring and management were still in their infancy and didn’t receive the attention they deserve.
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 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 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. In this case, NPS measuring is basically meaningless. Huge international corporations generally have a price advantage, or another competitive advantage, on their side and therefore a position equivalent to monopoly in their market. Lack of options may force people to remain customers, even if they constantly complain about the company to anyone who listens.
NPS question doesn’t fit all situations. When a customer is unhappy with the service they received, understandably they want to give feedback. NPS isn’t the right channel to vent after a single bad experience. Because even though the customer is normally a satisfied promoter of the company and the single bad experience won’t change their future purchasing behaviour, they will probably still give a bad grade if presented with the NPS question then. The inadequacy of the NPS question is also evident in indoor amusement parks, where the customers are usually children or teenagers. The answers are often extremes: either 0 or 10, there’s no middle ground. Many adults regard feedback surveys the same way, because they think that’s how to get the message through.
Mere NPS score in itself doesn’t provide enough information about how to develop and grow your business, but it’s a good metric and tool in the customer experience improvement strategy as a whole. Customer-centric service culture is here to stay, so it’s worthwhile to start paying attention to customer experience, be it NPS or other customer satisfaction metric that you choose to help you navigate your business towards better customer experience.