NPS, the common acronym for Net Promoter Score continues to be heavily discussed in the Customer Satisfaction and Insights worlds – just Google it. But, what you will now find are many articles that question the veracity of using NPS as a singular customer satisfaction metric.
NPS was a measurement created as a “one number solution” to assess customer advocacy and help predict changes in loyalty, and a substantial number of Fortune 1000 Companies continue to use it. But is NPS right for your company or brand?
Here are five things you should think about when considering NPS as a key performance indicator (KPI) in your customer satisfaction evaluation program:
- Set stakeholder expectations on how NPS will be used and interpreted: Traditional NPS uses an 11-point scale, with the NPS score calculated by the subtraction of “% of Detractors [0-6]” from “% of Promoters [9-10]”. Some questions to ask: is this a reasonable KPI for your business? Will it be used to determine and track an advocacy benchmark in isolation and/or vs. competitors? Will customer service reps be compensated based on scoring? Does your company have a sense of what is a ‘good’ vs. a ‘bad’ score for your industry or category? This all speaks to the importance of team alignment on program design.
- Is it more important to measure the Relationship (rNPS) or the Transaction (tNPS)? This will depend on how customers interact with your business and how the business promotes brand equity. Companies whose customers have potential for many independent interactions may be well served by tNPS, while rNPS may be a better fit for businesses who spend heavily on promoting their brand and image because that relationship between the company and the customer supports larger, less frequent purchasing occasions.
- How often should one measure NPS? If measuring the relationship, unless there are big changes in the marketplace or with your branding or even operations, once a year will typically suffice. Measuring tNPS more often is usually recommended, especially if your company can quickly adjust operations to address problem areas.
- Is your category or brand well suited for NPS measurement? The broad base of literature available – supported by our experience here at RTi – suggests that customers are more likely to recommend categories/brands where there is more personal involvement; where using the product or service is more of an emotional or lifestyle experience, indicating something about consumers’ core lifestyles or beliefs. Think cars, online media, smart phones, meal kits, and diet plans (all high personal involvement categories) compared to lower involvement categories such as insurance and other financial products, food and beverage staples, and other types of products where people do not routinely share information with others about the brands/services they use.
- NPS scoring may not tell the whole story, or even give an accurate enough view of the landscape to aid in identifying business opportunities. If yours is a category where customers are not as likely to naturally recommend, the use of an additional (or different) KPI, such as Overall Satisfaction, will be very important in helping the team find areas of strength to leverage as well as opportunities for improvement. Across the thousands of NPS surveys conducted by RTi, about one-third of Detractors (a group which actually encompasses both the mid-point and bottom parts of the rating scale) actually say they are very satisfied with their brand interaction – so relying solely on NPS could lead to expending effort to solve problems that do not exist.
Just as with so many other decisions, the decision of whether to use NPS is not definitive. Depending on your goals and your business, this single measure, while simple, may or may not be best. Our recommendation, and your best chance to arrive at the correct solutions is to discuss these considerations with your stakeholders and research partner so that you design a valid and actionable measurement tool that truly provides meaningful direction and optimizes brand opportunity.