I’d like to issue an apology. On behalf of the insight community I’m sorry that we have stood by and allowed NPS to become such an important business metric.
Let me be clear. My issue is not with the NPS studies that businesses employ to measure customer experience at a tactical and strategic level – these are hugely valuable tools. My issue is with the metric itself… Likelihood to recommend.
Much of the original evidence linking NPS to business growth has been retracted however it was sufficient enough to spark a global NPS movement and the rest is history. I now challenge you to find a business where NPS is not one of the key customer metrics.
I understand why the measure took hold in a world where customer satisfaction wasn’t enough and business leaders crave quick and digestible measures that facilitate inter-company benchmarking. In many ways NPS has been a force for good, pushing the customer onto the agenda at the highest level.
I now challenge you to find a business where NPS is not one of the key customer metrics.
The trouble is, it doesn’t work.
Talk to any researcher who analyses NPS at a detailed level and they’ll tell you about all the challenges they face…
“It’s so volatile”, “It’s not operationally focused”, “It’s difficult to diagnose and predict”, “You can’t really make cross industry comparisons”.
I could forgive these challenges if it was clear that improving NPS would lead to improved business success but it doesn’t.
I have a confession to make.
I have worked with several companies that have failed in recent times (hopefully my guidance didn’t contribute to their downfall) but one thing that struck me about all of them was that their NPS scores were sky high. Why did they fail then?
In fairness, it was a multitude of often structural factors that led to their downfall but as a customer champion, one thing was clear to me – they didn’t truly understand their customer needs or how to drive the right profitable customer behaviour and their misplaced faith in NPS blinkered them to the truth.
The truth is that NPS isn’t right for all businesses. Not surprising given that all businesses aren’t alike. So what is the right measure? I’m sure you’ll not be surprised to hear that there is no silver bullet and each company needs to find its own way when it comes to choosing the right customer metrics.
What is clear to me is that the right metric needs to focus on measuring how a business aims to drive its growth and success and the role that consumers play in that success. For many rapidly growing businesses new customer acquisition is key and in these instances NPS might be appropriate. For many established businesses the key is customer retention and for many operating in very competitive environments with lots of customer switching, ensuring we fulfil customer needs and wants is paramount.
What is clear to me is that the right metric needs to focus on measuring how a business aims to drive its growth and success and the role that consumers play in that success.
As researchers and customer champions it is our duty to lead the evolution in the way we measure success amongst out existing and prospective customers. It is our responsibility to make any evolution commercially relevant, easily adoptable and desirable. Those who succeed in this will be the success stories of tomorrow, those who carry on blindly chasing NPS will flounder.
Oh, and if it’s any consolation, NPS is just one question. We can always continue to measure it as we make these changes for the better… just in case I’m wrong.