NPS: Stop Focusing on the Score and Drive Business Growth Instead

NPS is the most misunderstood and misused management tool in business. I’m not saying that to be provocative or as click bait. I truly believe it. Net Promoter is based on a philosophy that we all learned in kindergarten: The Golden Rule — “Do unto others as you’d have done to you.” Or as Andy Taylor, Executive Chairman of Enterprise Holdings, and someone Fred Reichheld credits as the spark behind the creation of the Net Promoter Score, has said: “There is only one way to grow a business profitably. You make sure your customers are treated so well that they come back for more and bring their friends.”

When NPS first launched, it was based on the “Ultimate Question” and called the Net Promoter Score. The score was calculated using the Likelihood to Recommend question, categorizing survey respondents and customers into the three categories: Promoters, Passives, and Detractors.

As Bain’s analysis and thinking evolved, NPS developed into the Net Promoter System and shifted the focus to the open-ended follow-up question about “why” the score was what it was, recognizing that other critical elements needed to be in place to be successful: leadership commitment, the inner and outer learning and improvement loops, and a robust operational and analytic infrastructure to support deeper and more financially oriented analyses.

Unfortunately, not enough companies made or continue to make the transition to the system elements of Net Promoter System and are still stuck on the score and what I call “scoreboard watching.” They monitor and distribute lots of reporting focused on whether the score went up or down without any real understanding of why the shift occurred or what actions the company took to cause it.

Take 10 seconds to do a Google search about NPS and you’ll see that nearly all of the criticisms about NPS focus on the score: how it’s measured, the focus on a single metric, how the three categories are defined, whether the score actually predicts future behavior. These criticisms fixate on the wrong thing and reinforce the focus on surveys. And they miss the point of NPS: It is about building a growth engine for your company by creating a learning culture singularly focused on customers’ needs, wants, and expectations and driving continuous improvement.

The focus on surveys and the obsession with the score are killing CX programs and stifling CX improvement. The reality is that most companies get less than a 20% response rate on their surveys, and many less than 10%. So their surveys don’t even represent the vast majority of their customer base. And most companies don’t understand how well the sample represents their customer base in terms of segments, profitability or value, etc., so they can’t explain the weekly/monthly/quarterly movements that likely have more to do with sample mix than actual score change. Some companies try to weight the data to account for this. STOP. JUST STOP. THE SCORE DOESN’T MATTER.

When I ran CX for two of the world’s largest rental car companies and our operations teams would tell me about their scores, I would tell them, “I don’t care about your score. I care about whether it’s improving and, more importantly, I want to know that you’re learning and doing things differently as a result of customer feedback and that is what’s causing the score to improve.”

HOW TO REALLY BENEFIT FROM USING NPS

NPS is about creating a culture of learning and continuous improvement designed to empower growth and profitability through better customer experiences. Here are my recommendations to supercharge your NPS program:

1. You have to have a closed-loop program that responds to customers after they provide feedback. NON-NEGOTIABLE. This is both an opportunity to prevent churn as well as to learn from customers how your products and services can be improved. According to Forrester, 61% of companies don’t have a formal process for closing the customer feedback loop. If a customer takes their precious time to provide feedback and you don’t respond, at a minimum they are unlikely to give you feedback again; at worst, they will churn.

2. Use huddles or team meetings to share learnings and agree on shared actions to drive improvements in CX that can be implemented at the team or location level.

3. Use text analytics. And I don’t just mean on the open-ended questions in your survey (You are using those, right?). You should also be combining call and chat transcripts, website feedback, reviews, social media posts, CRM notes, and any other form of unstructured feedback you capture. This is a goldmine of a learning opportunity that too many companies miss out on because of their focus on the score. Just because you don’t have an NPS survey rating from someone doesn’t mean you can’t learn from them.

4. Use predictive analytics to attempt to “score” or classify the rest of your customers — the 80–90% that aren’t responding to surveys — as well as try to predict potential churn, future sales opportunities, etc. This goes hand-in-hand with text analytics.

5. Engage with your Promoters to activate them as your marketing engine of growth. Too many companies focus solely on their Detractors and resolving issues. But the whole philosophy of NPS is to drive referral business. How can you activate or incentivize your Promoters to actually follow through and recommend you to friends or colleagues? What type of referral program do you have and can you track actual referrals?

At the NPS Forum this week, Andy Cockburn, the CEO of a referral marketing company called Mention Me whose mission is to activate referrals, shared some interesting data about the power of referrals:

• For customers who make referrals, the Customer Lifetime Value (CLV) as measured in your CRM system may only be one-half of their actual worth to your company based on their referrals

• Most of the upside in future CLV for Promoters comes through their referrals, not through additional purchases

• Generally, the biggest advocates are worth much more than a company’s highest loyalty tier members. So it forces a conversation on who are truly your most valuable customers

If your CX program is not delivering ROI and you really want to activate your growth engine, stop focusing on the Net Promoter Score and try these tips to reduce churn and drive real revenue growth. And make sure you add the systems and rigor to be able to capture and measure that growth.

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