NPS: Helped or Harmed?

It has been about 12 years since Dr. Fred Reichheld wrote his original article in the Harvard Business Review entitled The One Number You Need to Grow, which later led to an entire book on the topic.   This seminal work has had a profound and lasting impact on the CX industry.

For the uninitiated, the Net Promoter Score (NPS) is a 11 point anchored “would recommend” scale where you subtract the bottom 6 (detractors) from the top 2 (promoters) to get a “net” promoter score[1]. This measure has been enormously popular and widely adopted in many CX metric programs.  But one question that I think the industry needs to know is:

 Has it helped or hurt?

Helped

In the “helped” column it placed a clear focus on customer experience among the C suite types rather than pursuing “bad profits”; short term gains at the expense of long term enterprise health. Companies that otherwise would have not been interested or perhaps were intimated by the cacophony of opinions on the topic embraced customer experience efforts and invested heavily.

Indeed, according to Markets and Markets the total spend on CX in 2020 is projected to be roughly $10.8b up from $3.8b in 2014.  In case your math is rusty, that’s more than double the investment in 5 years.

Also, it has offered a nice shorthand to benchmark your own company, competitors, and even across industries.  The genius lays in its simplicity, it can be explained in about 2 sentences to busy executives and worker bees alike.  No complex multi-layered attribute models and weighted indices, it’s just plain old “would recommend” with a twist of lemon.  Delicious!

Harm

In the harm column, it is arguably one of the most confused concepts in Customer Experience today.  No, it is not the best predictor of business performance, and I don’t ever believe Dr. Reichheld ever exactly said that it was.  No, it is usually not the best measure to incentivize your divisions, departments, stores, or employees.  No, it is not enough to measure one question to understand the customer voice.  As one of my analysts posted, perhaps a bit harshly, on Fred’s blog “Dr. Riechheld, I give you idea an 4, based on your logic, that’s all you need to know to improve.”

However, I think the biggest unforeseen and unintended consequence was that business people started focusing on the number rather than what to do about it.  I cringe any time I hear about how some company “needs to improve NPS”.  No you don’t need to improve NPS, you need to improve the customer experience and order to do so, you have to do something.

This paucity of doing something is perhaps why we have seen almost zero improvement in the last 20 years in the American Customer Satisfaction Index.  In quarter 3 of 1994 the ACSI was 74.8 and in that same quarter of 2015 we have achieved a score 73.8.  Now that’s progress!

From Indices to Actions

To be fair, I don’t think Dr. Reichheld ever foresaw or intended the warping and perversion that we have seen with NPS in practice in some instances. So much pressure on one tiny little number. Like many inventions, it was an innocent and good idea that went rogue.

NPS has also inspired a collection of new indices such as Customer Effort,  Net Emotional Value, and others.  That’s great in that it keeps the focus on the customer. Understanding customers’ thoughts and feeling are requisite for improving the experience, but there are no magic bullets.

Let’s spend 1% of our time worrying about the numbers and 99% doing something about it. Investing in experiential design from a customer first perspective will pay much larger multiples in business outcomes than measurement.

Let’s design online and in store experiences that make customers want to come back. Let’s focus and hiring and training the best people we can and give them the right tools to create a great experience.  Finally, let’s invite customers to help co-create that experience at scale. This is where we will get the true recurring dividends out of CX, not rejiggering the metrics.

What do you think?

 

[1] I always felt bad about those lonely ignored “Passives”

3 thoughts on “NPS: Helped or Harmed?

  1. Pingback: The Truth about the Net Promoter Score - ORC International, Inc.

  2. An additional problem from my perspective is that NPS has become a brand in itself. So people in our organisation are *desperate* for us to introduce it. I get that it gets engagement across the organisation, but honestly I think we need to raise competence than to blindly do what the people think they want. 5-10 years ago companies needed to go on the customer centricity journey and perhaps nps helped. But now I think we’ve got that engagement in customers, and the step now is raising competence in how best to customers their experience and how to use that intelligence

    Like

  3. An additional problem from my perspective is that NPS has become a brand in itself. So people in our organisation are *desperate* for us to introduce it. I get that it gets engagement across the organisation, but honestly I think we need to raise competence than to blindly do what the people think they want. 5-10 years ago companies needed to go on the customer centricity journey and perhaps nps helped. But now I think we’ve got that engagement in customers, and the step now is raising competence in how best to customers their experience and how to use that intelligence

    Liked by 1 person

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