Why I Don’t Use NPS

A single number doesn’t translate to success nor can be used to indicate customer loyalty and experience. It’s exactly why I don’t use (and trust) NPS.

Small and large businesses use Net Promoter Score (NPS) for reasons like giving them a metric to improve on their current strategy. It’s a simple tool that anyone can use, especially small businesses that are overwhelmed with BIG DATA.

[Simplified, big data is a complex data set from multiple and new data sources. It’s voluminous in that even a data processing software might not be able to manage it. While complex, big data addresses major problems that large companies might have overlooked.]

On the other hand, NPS is versatile for both small and large businesses. Even startups can use it with ease to measure how likely customers are to recommend the business to their networks (customer satisfaction).

And besides an NPS question like “How likely are you going to recommend ABC Textiles to your colleagues, friends and family members?”, some also add open-ended questions so that customers can provide answers that reveal a reason behind a score.

Frederick Reichheld and his team from Bain & Company created NPS, and via the Harvard Business Review Article “The One Number You Need to Grow” this metric became popular.

Proponents support the idea and conclude that companies/businesses using NPS outgrow competitors by at least 2.5 times.

The Scoring System (0-10)

Detractors (0-6) are the customers UNLIKELY to recommend a business and LIKELY to speak poorly about it to others.
Passives (7-8) are the customers that generally like a business but are neutral about referring new customers.
Promoters (9-10) are the recurring and loyal customers/brand evangelists who would recommend a business to their network. These people are also likely to generate a brand’s 80-90% referrals through channels like social media or word-of-mouth, for instance. They just love your business!

To determine your NPS: subtract the detractors’ percentage from the promoters’ percentage. For example, if you calculated 50% for promoters and 20% for detractors, your score is 30.

The Up Sides

The net promoter score isn’t ideal, especially for large businesses with more detractors than promoters. It can be useful, however, if you’re looking for a competitive benchmark by seeking feedback from the customers of your competitors and your customers. In this case, you can gain an objective view of the competitive landscape.

Asking for user/customer feedback is another way to use NPS. You can seek feedback after selected experiences, such as during first-time purchases. It allows you to see how their selected experience impacts their brand perception and loyalty.

The Down Sides (Why I Don’t Use NPS)

You need to be wary about using NPS in gauging customer satisfaction, loyalty and retention because it’s flawed in more ways than one. The following points summarize why I personally choose to not use NPS:

NPS doesn’t reflect on what to improve immediately.

Most customers provided a score of 3 as feedback, so what can be improved to increase this score? There is no specific action indicated concerning what to improve specifically in order to achieve better results. It would be more practical to run regular customer feedback questionnaires instead of relying on the single-question response.

It asks a single question.

“Likely to recommend” doesn’t translate to overall intention to buy again or satisfaction with your product or service. Therefore, it can not and does not measure loyalty.

Asking multiple questions to gauge satisfaction and running regular customer feedback surveys about the specific features of your products/services could be a more beneficial option for your business.

Using NPS means you run the risk of misallocating funds.

NPS doesn’t give us the big picture of what we need to know – the specific metrics on X, the reasons for customer behavior and so on. In this case, businesses could lose money for fund misallocation.

According to Timothy L. Keiningham and his team in the paper, “A Longitudinal Examination of Net Promoter and Firm Revenue Growth,” presumptions that NPS is superior or failproof are erroneous. The researchers point to potential for fund or resource misallocation as a consequence of using Net Promoter Strategies to measure company value and firm performance.

Only short-term sentiment is measured.

NPS measures only the current sentiment of a user with a specific offer he/she bought or tried recently, but it doesn’t indicate any future buying decisions or behaviors.

Giving your business a 9 now doesn’t mean this customer will be a brand loyalist or evangelist because, again: NPS does not give you insight on customers’ future behavior.

There’s no mathematical logic behind it.

With NPS, users rate a business from 0-10 as they see fit . They interpret it, but the scores don’t clarify the “why” behind each score. If you’re still using NPS because you find it useful, you might as well try using other metrics that are different and more effective.

Moving forward

Instead of NPS, you should observe customer behavior, ask multiple questions and look at insights based on data to gauge customer satisfaction and likelihood to purchase again. You can also ask your team these questions to add another layer in determining customers’ behaviors through outcomes.

Examples:

How many items are purchased per visit? How many referral codes are redeemed? (eCommerce)
How many products are sold per customer? How many licenses are activated? (B2B)

Questions like the ones above are better metrics to determine customer behavior and experience that inform about how well are you meeting customer demands/needs and how sufficient your strategies are in retaining and attracting customers.

But at the end of the day, the aim is to make customers feel like your business has a brand that they can trust and that you’re always ready to improve your products/services to improve their lives.

Show that you’re human even in this remote #WFH world, and just like that customer satisfaction and loyalty will follow.

Your customers become brand evangelists because you give them a positive experience, which naturally turns interactions with customers into real relationships – the #humanway of doing business.

After all, customers are more than just numbers. They’re humans that need genuine and sincere brands that understand, empathize, empower and offer real solutions.

Instead of focusing on a single question and using it to determine customer satisfaction and loyalty, use real connections and drive business in #humanized ways that reflect the company’s culture and all the touchpoints where customers interact with your business.

In Love & Respect,