Written by Amanda Stevens Inside Retail Contributor
If you’re reading this, you’ve probably heard of NPS. Better yet, you probably know exactly what our organisation’s NPS is.
Launched in 2003, before Facebook, Instagram, Linkedin and Snapchat, NPS is the most widely used system to measure and benchmark customer satisfaction. It is calculated based on an organisation’s existing customers’ response to a single question: What is the likelihood that they would recommend Company X to a friend or colleague? The creators of the NPS system claim the score correlates with
an organisation’s revenue growth.
If you’re not familiar with the finer details of how the score is calculated, here’s how it works. Customers respond to the survey question by scoring a business – typically on a zero to 10 scale. If a customer gives a score of nine or 10, they are promoters. If they give a score of seven or eight, they are passive. You don’t know if they are leaning towards loving you, leaving you, or they just don’t care. Customers who give scores of six or lower are detractors. To determine your official NPS, you subtract the percentage of customers who are detractors from the percentage of customers who are promoters.
The problem with NPS
Despite being a simple, easy-to-implement survey that serves as a benchmarking tool for customer satisfaction, the main problem with the NPS system is that it does just that: it measures customer satisfaction. But when was the last time you recommended a brand or business because you had a satisfactory experience? Satisfaction doesn’t drive brand advocacy or loyalty; an experience that exceeds expectations, that delivers “wow” moments and surprises, delights and adds value at every touch point does.
The NPS system was created in an era when customer service was a department that responded to customer enquiries and complaints. Today, nearly every department is concerned with the customer experience. The other problem with the NPS system is the key question that everything is based on: What is the likelihood that a customer would recommend Company X to a friend or colleague?
In an era of inner circles (best friends), social circles (Facebook, Instagram) and professional social circles (LinkedIn), what you would recommend to a friend might be different from what you would recommend to a colleague. And what you would share online might differ dramatically from what you would share offline.
Measuring customer advocacy in such a one-dimensional way is not delivering the actionable insights that customer research should. To really understand how customers feel about your brand and, more importantly, what would make them a raving fan, you need to think less about benchmarking and more about a qualitative approach that provides the all-important “why”, not just the “what”.
The current NPS system also fails to consider the potential complexity of the customer journey. You might rate your initial interaction with a brand positively but have another interaction that falls way below your expectations. Understanding what stage of the customer journey needs improvement, and the optimal time to capture brand advocacy, is powerful information for marketers.
A qualitative approach
Today more than ever, brand experience matters more than just having satisfied customers. Understanding the customer’s journey and experience over time is critical. Customers interact with businesses through numerous touchpoints in multiple channels and media, and every touchpoint and channel plays a role in shaping what they think and how they feel.
Shoppers who respond positively to a customer satisfaction survey today might never be repeat purchasers. And just because they are happy with your service doesn’t mean they are loyal or likely to recommend your brand. You must understand that customer satisfaction, customer loyalty and brand advocacy are all different things, and not a result of each other.
The NPS system and other customer satisfaction surveys will give you an important measure of your performance in relation to competitors, but they should never be relied on as indicators of customer loyalty or brand advocacy.
A more qualitative approach including mystery shopping, customer journey mapping and ethnographic studies, cross-referenced with social media insights, will ultimately tell you not only what your customers think, but how they feel, and why.
Amanda Stevens is a consumer trend and experience expert. Demystifying why consumers buy, she hands businesses the keys to building customer and brand advocacy.