NPS is hot. NPS is simple. This Net Promoter Score is celebrated and critised. Of course, something that simple as NPS can not give you enough information. And yet NPS is an extremely useful indicator. Read how NPS can help you.
Net Promoter Score
Net Promoter Score was introduced by Harvard Professor F. Reichheld after years of research. Reichheld discovered that NPS is the only customer satisfaction indicator that correlates between customer satisfaction and bottom-line profitability.
The beauty of NPS is its simplicity. That is at the same time its major drawback. So, how should you use NPS in your organisation?
NPS gives a signal
Talking to quite a lot people since my previous post, I learned more about the drawbacks of NPS. Particularly the fact that there is cultural differences and that the NPS is too simple to give you information.
And of course, they are right about the simplicity. Any singular metric cannot give you much information, if at all. But the NPS is an incredibly important indicator. NPS alone doesn’t provide you with information, but in the two following situations will give you information:
- when in context with your competitors, provided that these numbers are known in your industry. It will provide you how you perform compared with your competitors
- when measured in six equal intervals, e.g. months or quarters, it will provide you a trend
Of course, if the NPS has a declining trend or is worse compared to competitors, more information is required to take relevant action. Information that we may already have gathered or information we go out for now.
NPS helps you to align internally
But NPS can be very useful in another way. Using it as the single customer satisfaction indicator internally, NPS creates internal alignment. Focusing on NPS helps to see clearly the results of actions taken and for employees it is easy to buy into such an indicator. More indicators will create confusion and will actually blur the vision on the customer.
But… about the validity of NPS
In some discussions, I noticed a strong push back on NPS as the guiding indicator about ‘customer health’ in organisations. Although absolutely not statistically relevant, I noticed that this push back came predominantly from data driven managers rather than from customer driven leaders. You cannot drive Customer Experience by numbers, you need to drive it by performance of people.
That made me realise that there is no reason to act, as long as people discuss the validity of NPS and the signal it gives. Particularly in number driven organisations, there tends to be a hunger for more data rather than a desire for a single indicator. And that is exactly the beauty of NPS, it signals what is going on and then people can dive into data to uncover the reasons.
If you are an experienced manager with a solid vision how to work with customers, NPS will help you to signal the result of your actions.
Disclaimer: Net Promoter©, NPS© and Net Promoter Score© are registered trademarks of Satmetrix Systems Inc., F. Reichheld and Bain & Company, Inc.
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