Is Net Promoter (NPS) Score Bogus? WSJ Article

“Is Net Promoter (NPS) Score Misleading?” My Views About WSJ Article

There’s an article in the Wall Street Journal that is creating some commotion. It raises the question of whether or not “Net Promoter Score,” otherwise known as “NPS,” is a good measurement of customer satisfaction. Many customer experience (CX) experts say yes. They depend on NPS as a sole metric to determine customers’ perceptions and feelings about their brand. However, others debate the validity and usefulness of Net Promoter Score, saying that “the science behind NPS is bad, and it’s been oversold.” Having worked in Corporate America leading customer experience for many years, I have an opinion about this topic that I’d like to share.

is measuring NPS worth doing?

My answer is yes. Net Promoter Score is a valuable leading indicator of customer loyalty. (If you are unfamiliar about the NPS score, watch a short video in my other article.) I also believe that drivers of NPS are important to measure too, such as Level of Effort, Customer Satisfaction (C-Sat), Customer Sentiments and more. These key performance indicators (KPIs) coupled with NPS (“how likely customers are willing to recommend a company’s product and services”) allow managers to make the most informed business decisions on a strategic and tactical level.

customer experience metrics
Source: http://ow.ly/1Aih50ui0PE

is there any downside to using nps?

My answer is yes. The numeric score is insightful. Yet, when employees only look at the survey rating without reading customer comments, they miss essential information for action planning. I’ve seen this happen often throughout my career whereby customers provide a high rating (9 or 10 scores) but then indicate pain points within the comments section. They’ll say for example, “I love using your product, but when issues arise it’s challenging to get help, and response times are too long.” If you consider the NPS score by itself, it appears that the customer is a brand advocate. When you read the verbatim however, it is clear that this customer may easily be lured by competitive offers. Consequently, it is essential to analyze BOTH the qualitative and quantitative data for NPS to be fully useful.

is NPS a driver of Revenue?

The Wall Street Journal article shares different opinions about NPS and financial correlations. Despite the debate, it is interesting to see the upward trend of how many companies are referencing NPS at investor meetings. While no one has 100% proven that NPS is a driver of revenue, I believe that measuring customer satisfaction is a useful indicator of risk and future behaviors, whether it be cancellations, bad press on social media and review sites, etc. Thus, it is critical that every company, no matter what size or industry, focuses on customer experience metrics. I encourage all brands to use Voice of Customer (VOC) insights as it really helps to minimize loss of business, loss of customer trust, etc.

NPS and Company Earnings Calls
Source: WSJ analysis of companies’ earnings calls

 

should nps scores be tied to employee bonuses?

My opinion is Yes. It is the only way to make everyone in the company care about customer excellence and OWN it, not just say it. I have worked in organizations where CX metrics were tied to leadership objectives and not frontline teams. That approach did not drive a customer-centric culture or employee accountability. Detractor scores declined when customer satisfaction goals became a shared objective across EVERY department. I have a lot of stories to share about this topic. Contact me if you want more information and mentorship.

I’m interested to hear your perspective about NPS. Join conversations on social media: Twitter | InstagramPinterest. Also, Sign Up for my newsletter to receive timely updates about Doing CX Right.

P.S. I’ve saved a copy of the Wall Street Journal article written by Khadeeja Safdar and Inti Pacheco. Click here for access to the PDF for personal (non-commercial) use.

 

DoingCXRight by Stacy Sherman

 

 

 

*All opinions expressed are the authors’ alone and do not reflect opinions of or imply the endorsement of employers or other organizations.

 

2 thoughts on ““Is Net Promoter (NPS) Score Misleading?” My Views About WSJ Article

Share your comments on this post:

This site uses Akismet to reduce spam. Learn how your comment data is processed.