Friday, December 23, 2011
What do you think about NPS (Net Promoter Scoring)?
Some managers love the concept, and some hate it. We
think we might know why.
11:10 am est
On the positive side NPS
has taught managers a couple of powerful lessons. First, that mean scores can mask some terrible truths.
Whether you decide it’s more important to measure customer satisfaction (the more traditional approach), or willingness
to recommend (the NPS method), in reality customers don’t keep acting loyally to a brand because they are getting average
performance. They act loyally when they are highly satisfied with the value they are getting -- and they
leave a brand behind when they don’t. Customers who give those middle, average ratings may stick with a brand as the
result of simple inertia, but with just a small catalyst they to will defect. So the NPS analytical method
of subtracting the number of low ratings (0-6) from the number of top-two-box (9-10) ratings, (while leaving those who scored
6-8 out of the calculation) is a much more realistic measure than calculating a mean or average score as satisfaction practitioners
have done for years.
A second highly
positive advantage of NPS is that simply by claiming to be “The Only Number”, or by delivering a single score,
they have brought the customer experience from the dark corridors to the center stage of the nation’s Boardrooms.
What we find damaging is the suggestion that NPS is somehow
so much more robust and meaningful in predicting future buying behavior than other measures of customer intention to repurchase
or satisfaction. We captured all three measures for a number of years and it was always our experience
that the three (satisfaction, intention to repurchase, and willingness to recommend) track in amazing parallel.
More concerning is that we have seen managers believing that a consumer’s response to the “would you recommend?”
question is a measure of word of mouth behavior. As Kumar, Petersen and Leone documented in their study published by
the Harvard Business Review 2007, intention and action are not the same thing. (68% of a financial services
firm’s customers said that they would recommend, only 33% acted. 81% of a telecom firm said they
would recommend, but only 30% did.) And as a result see reliance on NPS leading to poor efforts in managing
customer word of mouth.
What do you think?