3 Things Most Companies Are Getting Wrong
Thousands of companies (including 2/3rds of the Fortune 1000) use NPS. But it’s surprising to discover that as ubiquitous as this metric has become, a great many leaders don’t quite understand it as well as they ought to. For example, if you haven’t read The Ultimate Question (written by Fred Reichheld of Bain–the godfather of NPS) then there’s a good chance you might have fallen victim to any of the following 3 misnomers:
1. NPS is mostly about advocacy and positive word-of-mouth.
Not as much as you’d think.
When Reichheld developed the question, “How likely are you to recommend us to friends and colleagues?” what he was searching for was the best single way to determine whether that one customer was likely to remain loyal.
You see, if you just ask someone “Hey, are you gonna remain loyal?” their answer to that question isn’t very predictive of their future behavior. But if you ask a customer to put themselves in a situation where they might influence someone else, their mindset (and true attitude toward your company) becomes more transparent and predictive.
Yes, there is some correlation between scoring a company as a “9” or “10” and actually saying something positive to someone else–but the question itself is designed specifically as a prediction of your future revenue potential and long-term loyalty based on the totality of your lifetime of experience with that company.
2. NPS is a great way to determine the success of service interactions.
Not really. It wasn’t designed as a transactional metric.
NPS is designed to measure a customer’s overall loyalty to a company, not just their most recent experience.
Asking the NPS question right after a service interaction isn’t a terrible idea (of course you’d like to leave customers with the feeling that they’d be willing to recommend you) but there are other transactional survey questions that are more predictive of future loyalty. The book The Effortless Experience which introduced the Customer Effort Score (CES), demonstrates that asking customers about their “effort” during a service interaction is a better way to determine effectiveness.
3. The goal is for our company to get the highest NPS score.
The biggest trap so many companies fall into is making inferences based on their overall NPS score. Beware!
As a reminder: The NPS scoring system = % of “9s” and “10s” or promoters, minus % of “0s through 6s” or detractors with all “7s and 8s” eliminated as neutrals, so the overall score ranges from +100 to -100.
For example: A company’s NPS goes from +10 to +20. That’s great, right? But if you don’t know exactly how the score moved, or why, then you don’t know whether that’s good OR bad.
Do the math: If 60% of customers gave you a “9” and 40% gave you a zero, that equals an NPS of +20. And that also equals “you’ll likely be out of business in no time.”
The point is, if you don’t know how your NPS score is moving, and more importantly why, then what did you learn? Or worse, what did you think you learned, only to be dead wrong?
CONCLUSION: The real goal of NPS should be to use customer feedback as a way to understand THEIR experience with your company, so you can continue to improve it.
If you use the NPS question as a way to proactively circle back with customers who gave you a “6” or less and have a conversation with them, only then can you find out exactly what it was about their experience that felt “off.” From there, you can learn everything you need to know in order to create a much better CX in the future.
So, don’t put so much stock in the number itself. Sure, it’s convenient because it’s one number on a dashboard, and it seems important. But beware of thinking that the number (in and of itself) is the goal. That was never Reichheld’s intent, nor should it be yours.
