01 JUL 2015

Why NPS fails… but is still worth it?

Net Promoter Score (NPS) is one of the most popular methods of testing customer satisfaction, however, it’s still far from perfect. Before you start with your NPS, find out all about its limitations.

  • It may present a distorted image of reality. Take the sentence: "Me and my dog, on average, we have 3 legs". It’s statistically true, but has nothing to do with reality. Can you compare the situation of a company with 40% of Promoters, 20% of Detractors and 40% of Passives with the one that has 60% of promoters and 40% of Detractors just because they both have an NPS that equals 20?
  • I’s too general. Whereas everyone knows it’s all about the details. According to the NPS methodology we should automatically classify those who give the score of 0-6 as Detractors without taking into account that the scale is rather widespread. Can we really compare the weight of an answer equaling 1 with the one that amounts to 6? Does the company need to take the same type of action to convert number 6 Detractors and number 1 Detractors into Promoters or Passives?
  • NPS won’t help you build loyalty among your customers. It surely offers a well defined number and the possibility to compare yourself with the competition, but it doesn’t give you any insight on why your customers are satisfied or not. In consequence it gives you no hints as to possible solutions and isn’t very much constructive. NPS requires additional questions or more profound follow up research that will allow you  to adjust your strategy of building positive customer experience.

So why did Net Promoter Score become so popular in the recent years? Is it just a fad? Here are the benefits that convinced the experts around the globe :

  • You’re making an effort to reach out to your customers. When running an NPS you encourage your clients to share their thoughts and show them you care. This kind of attitude brings out customer satisfaction to the front stage and ignites the discussion between the company and the clients. Consumers notice that and appreciate your concern.
  • It’s perfect for benchmarking. NPS research model is standardized and very general and thus offering a quick and easy way to compare your results with the competition and set an industry benchmark. It’s trusted by global brands such as Apple, GE or American Express. When measured regularly NPS can serve as a clear benchmark for the development of company’s loyalty policy.
  • It’s fast and easy. One simple question is enough to conduct the NPS survey. There’s no need for complicated analytics, complex questionnaires or advanced statistical knowledge. In no time you can have at least a preliminary verification of your customers’ loyalty.
  • It’s comprehensible on diverse organization levels. NPS presents customer loyalty data in a very simple way that is intelligible for the board, product managers developing brand campaigns as well as sales staff dealing directly with the customers. Compared with alternative solutions, Net Promoter Score gives clear data and common vocabulary for a joint, inter-departmental discussion on customer loyalty.

What else should you have in mind when considering a Net Promoter Score survey?

According to some theories, content clients are more willing to  share their opinion on the product than the disappointed or unenthusiastic ones. Such behavior may influence the results of NPS surveys to some extent. Others point out that the NPS question itself could produce a similar effect as it suggest a positive answer: "How likely is that you would recommend our company/service to a friend?"

It seems like there is no ideal, universal method of measuring customer satisfaction or loyalty. The key to success seems to lie in cautious analysis of all pros and cons and adjusting the methodology to the specific needs of each organization.

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