How this winning combination delivers enhanced CX clarity and actionable insights
The Net Promoter Score™, or NPS metric – relied upon by organizations to measure customer loyalty around the world – is understandably popular. This 10-point system is simple to implement and easy to comprehend. NPS helps identify “promoters” – customers who intend to say good things about you. It gauges the number of “detractors” – people who are likely to say less-than-flattering things about your brand. NPS will tag the segment of your customers that is “passive” – people who are neither excited nor disappointed with your brand.
Customer Experience (CX) experts agree that the NPS is a great place for any customer-focused organization to start. Even its creator, though, never intended it to be a sole CX indicator. For all of its advantages it is important to know its limitations. Relying too much on it for insights it wasn’t designed to deliver can mask negative emotions and opportunities. We recommend building upon NPS, not abandoning it, and considering real-time, accurate capture of customer emotions at the point of purchase, with the ability to collect greater volumes of data.
NPS: Widely used, and with good reasons.
- It is consumer friendly. We’re all used to ranking performance on a 10-scale. And we all know that we will recommend a good product or service to friends and family. And, let’s face it, we’re even more likely to discourage a friend from using a particular brand if we have a bad experience. This is familiar turf to consumers everywhere.
- It is company friendly. The scores are simple. They are easy to tabulate and share widely. Your score either goes up or down. This is attractive to busy executives who want you to “just bottom line it for me.”
- It is directionally valuable. Knowing whether people would recommend your brand or not is invaluable. What better compliment can you get than “Yes! I will tell all my friends about you!” And what a gut-punch it is to hear that people would steer friends away from as if you were a sinkhole. You want to know.
- It provides benchmarking over time. Because NPS has been around for so many years companies have years of data to use in comparing today’s ratings.
NPS: Widely misused, and likely misconstrued.
It’s not you, NPS, it’s us.
It’s no wonder it has caught on and helped companies across the world improve their services. But, like any tool, it’s just one in a toolbox. If you try to use it as the only tool, you might as well hammer nails with a screwdriver. NPS is invaluable when used as directed, but many organizations do not.
In its May 15, 2019, article, “The Dubious Management Fad Sweeping Corporate America,” the Wall Street Journal described how NPS has developed a “cult-like” following among CEOs. Positive scores are shared routinely during earnings calls of the Fortune 500. They are often taken as gospel and do not get the kind of scrutiny you might expect from a chief executive, like when they eye a profit-loss statement.
Boston-based founder of the Farland Group, Jane Hiscock, has more than 20 years’ experience helping companies implement customer advisory boards, strategy councils, and executive engagement programs. She told HappyOrNot that she is a fan of NPS, and agrees its biggest flaw is user expectations. NPS questions are over-asked and over-applied, she said. “Sometimes they are asked too soon, like right after an initial meeting. People aren’t rating the service; they are rating the meeting. Too often, businesses are taking direction from the scores without getting at what’s underneath the metric.”
Fredrick F. Reichheld of Bain & Co., the “The Father of NPS,” introduced his invention to the world via a December 2003 article in the Harvard Business Review titled, “The One Number You Need to Grow.” Since then he has seen NPS used in ways he never envisioned. He told the WSJ he was “astonished” that companies were using NPS as a performance indicator and to hand out bonuses. “That’s completely bogus,” he told the WSJ. “I had no idea how people would mess with the score to bend it, to make it serve their selfish objectives.” There are services out there that actually teach you how to increase the score itself.
To that point, Bain now calls NPS the Net Promoter System, positioning it less as a score and more as a method for improvement. It’s a system that is intended to work with other systems. And that is critical. You must collect additional, and more precise data points. “NPS is a great compass,” Hiscock said. “It is not, however, a satellite GPS system.”
The road to ruin is also paved with good intentions.
NPS relies heavily on whether a customer “intends” to recommend you. Christina Stahkopf, Ph.D., wrote “Where the Net Promoter Score Goes Wrong” for the Harvard Business Review. She reported that only half of consumers who express an intention to recommend your brand actually will. Surprisingly, 52% of all people who actively discouraged a brand also actively recommended it.
Social media platforms might be the best example of this dichotomy, Hiscock told us. “People will say they hate Facebook, then spend way too much time on it. People will say they hate Facebook – right on Facebook!”
It needs to get in touch with consumer emotions.
Forrester’s Maxi Schmidt wrote that it’s important to make sure your expectations for NPS match reality. It’s not a direct measure of customer experience quality, for example. “It doesn’t capture emotions,” she said, a critical element of any experience.
It doesn’t capture time and place.
Dr. Stahkopf said in her HBR article that a weakness of NPS is that it doesn’t take into account “when, where, why and to whom consumers actively recommended or discouraged a brand,” elements that are a “fluid state” and independent of consumer NPS ratings. Nor does NPS capture a consumer’s emotion at the time and place they experienced.
HappyOrNot: The Perfect Complement
So, NPS is valuable but its limits can’t be overlooked. NPS and the Happy Index can work together to paint a more detailed picture of what buyers and non-buyers really think and how you can effect positive change in your business.
The power of emotions, not intentions.
HappyOrNot does not rely on an individual’s intentions, but on how they really feel about the experience they just had. Not only does HappyOrNot ask them about their feelings, it does so via a friendly Smiley “machine” – so the customer does not have to be concerned about the feelings of the person receiving the information.
The power of the here and the now.
When people recall their past experiences or predict future behaviors, the resulting data needs to be viewed in context with other data points. HappyOrNot captures and reports a customer’s experience immediately following their engagement with your brand, and where that engagement took place. Businesses can react before more customers have a bad experience and before they go on to become detractors.
The power of volume.
Because it’s easy to use – people can tap a Smiley-faced button without even breaking stride – companies can count on more input. These ratings collect over time to give you a more comprehensive overview and help you to continuously improve performance. HappyOrNot customers collect upwards of millions of data points on various aspects of their operations.
The power of simplicity.
NPS and the Happy Index share this characteristic: they are easy to understand. But, HappyOrNot can gather more precise and detailed information which, as thousands of inputs come in, help support strategic decisions.
The power of compatibility and integration.
You can use HappyOrNot to toggle between your NPS and the Happy Index. Gauge customer loyalty with NPS and, with HappyOrNot, identify even small shifts in the quality of your customers’ experience.
The NPS system has been and will be – if used as directed – deployed with great value to organizations for years to come. To make informed decisions about your customers and your brand, however, using NPS in conjunction with HappyOrNot, with more detailed, real-time reports of actual emotions, these systems can help you:
- Create operational effectiveness.
- Drive revenue and profitability.
- Turn customers into repeat customers.
- Identify evangelists of your products and services.
- Inspire your teams to become excited about delighting your customers.
For more real-life insights, read one of the customer stories on our website and see what our customers had to say.