September 10th 2019
7 Minute Read
Even if you don’t know Net Promoter Score by name you’ll almost certainly recognise the question, ‘How likely are you to recommend our business to a friend or colleague?’
Despite evidence revealing Net Promoter Score is a poor measure of customer loyalty, it’s still the first choice for businesses desperate to retain more customers. Two-thirds of Fortune 500 companies still use NPS to understand how their customers feel despite garnering little insight from the results.
The status quo is a poor excuse for relying on ineffective and outdated feedback methods. What’s more, it can prove fatal. If you plan on implementing the Net Promoter Score in your business you must understand its limitations.
What is NPS?
NPS®, or Net Promoter Score®, is a means of measuring customer satisfaction as devised by the business strategist, Fred Reichheld back in 2003. This was the era when velour tracksuits were considered the height of chic and a Nokia 1100 was the phone to have. Trends don’t age well, and NPS most certainly hasn’t.
The early noughties saw NPS touted as the “one number you need to grow” your business. By reducing the customer experience down to a single numerical figure, Reichheld gave businesses what they thought they wanted. A simple metric to measure performance.
If you have a score, you have something to compare to and improve upon. And that logic makes sense. Even something as obscure as customer loyalty needs a yardstick of success. Otherwise, how would you know you needed to improve?
The problem is NPS is linked to 5-year business growth based on advocacy and referral. We now live in a socially connected world which requires a more dynamic and immediate solution to get to the bottom of how your customers feel. NPS is as outdated as it is flawed and here’s why.
1. NPS is difficult to interpret
The Net Promoter Score is a simple survey question asking how likely the customer is to recommend a business to other people. The respondent answers using an 11 point scale starting from 0 (Unlikely), to 10 (Extremely likely).
NPS has turned what is essentially a ‘yes’ or ‘no’ answer into an 11 point scale. Why 11? Not only do they give no logical or compelling reasoning behind this but the scale is also subject to interpretation by both parties.
The customer has to consider to which extent they might recommend your business (“Am I likely to recommend to a level of 6, or 7?”) and the business has to guess how their customers feel based on the answer they provide. Does a score of 6 mean we will recommend the business to a friend or not? Your business will be left guessing.
By their very nature, opinions are subjective and so are interpretations of the NPS scale. Two people could have the same experience and could give entirely different scores.
Let’s say we both visit the same car garage to have our cars serviced. We were served by the same person, received the same advice and paid the same bill. We both enjoyed the same witty humour of the service desk attendant and overlooked the 10-minute delay in getting our keys back. I score the garage 9 and you score it 6.
What can the garage learn from these responses? They’ve received mixed messages, having pleased one customer and failed the other. My score of 9 falls in the promoter group, whilst yours is a detractor. They don’t know what positively swayed my answer or what penalised yours. Despite our identical experiences, it’s our interpretations of the scale that affected our answers.
This kind of scale asks too much of the customer. It doesn’t make it easy for them to respond and it doesn’t tell you what you need to know about your business. Little actionable insight could be taken from the above example. A true reflection of customer experience would be to simply ask them how they feel.
2. NPS scoring is flawed
NPS and the way its score is calculated is as complicated as it is flawed.
Once you’ve got your feedback responses you do a series of sums which will give you your NPS Score. This will be a figure between -100 and 100 with the middle ground 0. This is both confusing and demoralising to your team.
The 0-10 point scale is broken down into three groups; detractors, passives and promoters. These group customers into their likelihood to bad mouth your business (scores of 6 and below) identify those that will take no action (scores of 7 & 8) and highlight your brand advocates (an aspirational 9 or 10).
Let’s consider an example.
You’ve finished a meal in a restaurant. It was ok, the food and service were alright but nothing to write home about. Because you’re a helpful individual, you fill in the scorecard left with the bill. You think 6 is a fair score. You circle the number, leave a modest tip, wave goodbye to your waitress and leave.
The table next to you had a terrible time. The waiter was rude, there was a fly in the soup and not to mention that terrible draft wafting in from the open door. They furiously punctuate their complaints on the comment card, leaving a big fat 0.
Different experiences, different scores and yet both equally attribute to the most negative outcome, an NPS score of -100. Not only is it confusing, but it also isn’t fair. Bizarrely, NPS survey results dictate that 0 and 6 are both detractors that equate to the worst possible score of -100. And yet, in the mind of the customer, the scores are very different.
3. NPS scoring is disproportionately skewed to the extremes
NPS also rules out the ‘Buts’.
The ‘But’ is when you had an amazing experience but there was a slight niggle that stopped you getting top marks. Like “the food was amazing but the toilets smelt”, or “the product was great but the online purchasing system was slow”.
In the real world, a score of 9 is great but it acknowledges a shortfall, no matter how small. NPS awards 9 the same value as 10 which begs the question, what is the point? And what have you learnt?
Let’s head back to that restaurant.
They’ve upped their game since our last visit. Minimal flies in the soup and no sign of that rude waiter. I dare say the experience was a solid 8 and let’s imagine everyone agrees.
If we were working in averages, that would give us a score of 8/10, pretty good by anyone’s standards. In the world of NPS however, a restaurant full of 8’s equates to an NPS of 0. Not only does 0 sound rather discouraging, but it’s also strictly middle ground.
This means if you made huge strides in your scoring, from 0’s to 8’s for example, your efforts aren’t being recognised fairly. Disheartening for staff and unhelpful for owners.
What if the restaurant uses that feedback and pulls out all the stops? They’re rolling out the red carpet. Everyone goes home smiling, well-fed and more than happy to leave you a well deserved 9 on their comment card.
A restaurant full of 9’s would give you an average of 9/10. After all, there’s always room for improvement. However, the NPS score doesn’t reflect that incremental variation. A restaurant full of 9’s results in an NPS of 100, the best possible outcome.
If improving your score from an 8 to 9 boosts your score by 100, but there’s no differentiation between a 9 and a 10, what does that tell you about your business? A 9/10 might mean the food and service were highly lauded but the toilets let you down. NPS doesn’t account for that marginal disappointment. Logically, shouldn’t incremental improvements result in incremental score changes?
In this respect, NPS is an all or nothing system. It provides very little insight into where you can make improvements and can be confusing and even detrimental to staff morale.
4. NPS is not a good predictor of future behaviour
Net Promoter Score is a poor measure of a customer’s future behaviour. Sure, you can ask ‘How likely are you to recommend this business to a friend?’ but you may not be able to trust the answer. In fact, every customer could answer a 10 but have no real intention of doing so. Unfortunately for all the businesses still using NPS that makes the whole precept null and void.
The issue is people often say one thing and do another. Just think New Year’s resolutions when the end of January comes around. That new gym membership card is just taking up space in your wallet!
The truth is, survey questions investigating past behaviours are more reliable than asking the respondent to predict future behaviour. One way around this is to examine how your customers feel, rather than what they may or may not do in the future.
Customer feelings are a precursor to customer actions. This is why measuring a customer’s emotional response to a product/experience/service provides a better insight into if they’ll use/visit/recommend it again.
5. NPS isn’t engaging or real-time
Fast food, on-demand binge-watching, same day delivery; these days we’re all about instant gratification. Net promoter can’t keep up. NPS was designed as a drip survey, sending questions to 1/90th of your database every day for 90 days. Not exactly “finger on the pulse”, is it?
It’s commonly acknowledged that time is our most valuable resource. Customers and employees don’t like theirs wasted. That’s why traditional long-form feedback systems have such low response rates, between 1-3%. Worryingly, this means you’re not hearing from the silent majority who contribute the most to your business. Therefore, you’re making business decisions based on a vocal minority who aren’t your core customer base.
What puts people off? People can’t be bothered or simply aren’t interested. There’s often a preconception that any input will fall on deaf ears. More often than not this data is left to gather dust on back-office shelves offering little foresight or actionable insight to the business owners who commissioned it.
If you don’t listen, you can’t improve. If people aren’t willing to share their experience, you’re in no better a position. For a holistic view of the customer/employee experience, you need to capture a larger sample of feedback. And that feedback should measure feelings, not a customer’s propensity to refer. As we’ve established, that’s not an accurate measure. This is why any system you choose should be simple and engaging as possible.
The last word
Knowing how your customers feel is infinitely more valuable than knowing if they’ll refer. Customer Happiness is a much better predictor of if and how customers will use your business again.
The One Question is a feelings-led feedback platform that can help you quantify happiness in your business. It’s the only platform to use the Customer Happiness Score® to measure and manage employee and customer emotions. Use your Customer Happiness Score for data-driven decision making that will take your business to the next level.
Discover the full comparison between CHS® and NPS® in NPS VS CHS: Which is right for my business?