The limitations of NPS

The limitations of NPS

Net Promoter Score (NPS) is often touted as a measure of customer loyalty. But does NPS actually do all it’s claimed to do?

If you work in customer experience or customer insights, you’ve probably heard the arguments before. For some people, NPS is the king of all metrics. Entire organizations base their strategic planning and prioritization process on the potential impact to NPS. Some investors view NPS as a strong forward-looking indicator of a company’s success.

On the other hand, you’ve got entire websites devoted to eradicating NPS.

With all these polarized opinions, it’s easy to feel conflicted about whether you should use NPS in your company. If you want to make a more informed decision, you need to be clear on the limitations of NPS surveys.

What is Net Promoter Score?

If you’re not familiar with Net Promoter Score, plenty of primers have been written on it. Here’s the gist of how it works:

  • NPS is based on one key question: “How likely are you to recommend [company] to a friend or family member?” Many organizations follow this up with an open-ended question, such as “Why did you choose that number?”

  • Respondents choose on a scale of 0-10.

  • If you choose 0-6, you’re considered a Detractor. Detractors are unhappy and are at a high risk of churning. They’re also more likely to share their negative experiences with others.

  • If you choose 7-8, you’re considered a Passive. Passives are generally satisfied, but they aren’t enthusiastic about your brand or product.

  • If you choose 9-10, you’re considered a Promoter. Promoters are loyal customers who love your brand and product and are likely to refer others.

  • Your NPS score is calculated by subtracting the percentage of Detractors from the percentage of Promoters.

That’s how Net Promoter Score works. Seems simple, right?

Source: NPS Surveys: Stop asking “What” and start asking “Why”

The many limitations of NPS

Unfortunately, it’s not that simple.

While the premise of NPS might seem straightforward, its methodology is full of all kinds of issues. Where NPS really falls down—the core of the issue—is in the way it buckets customers into three broad categories of promoters, passives and detractors.

That core problem leads to multiple limitations of Net Promoter Score. We’ll describe these below, but keep in mind that they aren’t independent of each other. Many of these issues are intertwined—and since they’re all tied back to the basic methodology of NPS, it’s impossible to break them apart completely.

NPS fluctuates wildly

It’s not uncommon for NPS scores to fluctuate wildly, especially with smaller sample sizes. When you’re using NPS to define your company priorities or to keep investors happy, this makes for quite the roller coaster. Over-reliance on NPS as a key performance indicator can lead to companies pivoting too quickly—every new fluctuation is like a fire alarm.

This volatility can cause whiplash for employees as they’re constantly pulled in different directions. It can make life particularly difficult for customer insights teams, because they’re the ones expected to decipher and explain why NPS is constantly changing.

NPS surveys aren’t representative

Many companies only send NPS surveys to specific segments of their customer base. That creates problems, because then the responses you get back paint an incomplete picture of your customers’ feelings.

Even if you try to avoid this by surveying everyone regularly, NPS still requires customers to opt-in to complete it. This isn't a national census—there's no obligation to complete every NPS survey from every company you've ever purchased goods or services from. Once again, this opt-in challenge leads to an incomplete picture of your customer base. Maybe some customers are so angry or so ambivalent about your product that they can’t be bothered to complete your survey.

Note: to be fair, virtually all surveys suffer from this opt-in challenge. It’s not unique to NPS, but it’s vital to keep in mind.

NPS survey timing is often inconsistent

NPS scores aren’t the only things that fluctuate. Your customers’ moods, opinions, and loyalty to your brand vary significantly over time. Recency bias plays a big part in the human experience—if your customers have recently had a good interaction with you, they're far more likely to respond favorably to your survey.

When it comes to NPS surveys, your data will be much more reliable if you’re consistently surveying customers over time—monthly, for example—rather than in fits and starts. If you can’t achieve this consistency, NPS won’t be as meaningful.

NPS detractors and passives often get ignored

We all just want to be loved, don’t we?

Some organizations lack the maturity to embrace negative feedback. They only want to look at NPS promoters so they can celebrate where they’re doing well. There’s nothing wrong with celebrating the good, but this approach comes at the detriment of detractors and passives. These customers have opinions too, but they get ignored and discarded. Their voices don't filter up to the people planning the next big customer experience project.

NPS surveys are easy to misunderstand

NPS surveys are pointless if the people you're surveying don't understand what their score means.

For example, say a customer scores your brand a 6.

To them, their customer experience wasn't great—but it also wasn't abysmal. In their eyes, a 6 is a fair score. They may not be raving fans, but they’re certainly not warning friends, family and co-workers to never buy from you. Yet, under the NPS framework, this customer is a detractor, which supposedly means they’re out there bad-mouthing your brand everywhere.

Multiply these possible misunderstandings across dozens or hundreds or thousands of respondents. When that happens, who knows what your NPS score even represents anymore?

NPS scores often don’t portray changes clearly

Consider the following example: a new CX initiative is rolled out.

Not long after it's discovered that 60% of your customers who previously scored a 2 now score your brand 6. They move way up the scale.

That's a huge improvement in customer experience and a clear signal you're on the right track with your CX projects! But if you look at this strictly through the lens of NPS, all of those customers still kind of hate you. Despite this massive change in individual responses, your overall NPS score wouldn’t have changed at all.

I guess someone's getting fired 🤷‍♂️

Annoyingly, say that same segment went from a 2 to a 7 (instead of a 6). They're now considered Passives, which means they’re sitting on the fence. They think you’re alright, but nothing special. Your overall NPS score would have improved here, but having a whole host of passives certainly isn’t inspiring.

Lastly, say a customer goes from a 6 to a 9. They were a passive, but now they’re supposedly a bonafide promoter. But moving 3 points on the scale isn’t nearly as big of an improvement as the last two examples we looked at! Do you really think this customer went from warning friends to stay away to actively shouting your brand’s name from the rooftops?

NPS often fails to deliver actionable insights

Organizations focused solely on converting as many detractors as possible into promoters are missing the point. They’re sitting on a treasure trove of customer insights, but they’re missing out because they’re too focused on the high-level NPS score.

A better approach would be to look at your score, then dive deeper with questions like these:

  • What was it that drove that customer from scoring a 2 to scoring a 7?

  • Which specific CX initiative was responsible for this change? Was it a mix of initiatives?

  • Did CX even influence the decision to score higher? Did other factors change?

  • What can we do better next time?

Understanding the 'why' behind your score —the context of your NPS—unlocks so much potential for your business. As you shift the focus from a numerical score to customer insights, you’re better able to understand and replicate positive changes across your whole organization.

What’s the alternative to NPS?

Once you’ve realized the limitations of NPS, you’ve got a few options. Depending on your organization and personality type, you'll likely fall into one of the following camps:

  • "NPS is pointless, [CSAT/CES/PES/Customer Health Score] is king!"

  • "Traditional NPS is flawed. Let’s simplify the scale from 10 down to 5 points."

  • "Traditional NPS needs improving, let's crank it to 11!"

  • "Let's score for NPS the traditional way but focus on the comment field."

That last viewpoint is the most insightful and wise one. NPS doesn’t need to be eradicated—it needs to be approached and applied in a different way.

NPS is a tool that’s been used for the wrong job. But don’t toss it in the dumpster just yet; find a better way to use it.

When you ignore the overall NPS score entirely you only get half the picture—a qualitative one—and it’s prone to human bias. Only looking at this part of the picture means you’ll probably go looking for the problems you’re already aware of, the ones you already care about fixing.

But if you ignore the qualitative—like most companies do today—you’ll have no idea why that customer scored you the way they did. You’ll never generate meaningful insights from all those responses, so you’ll never know what you can do to improve CX, drive revenue, and win market share.

The answer is to look at the whole picture: keep one eye on your NPS score, but keep just as much attention on the open-ended comments you’re receiving. This is the path towards continually improving your customer experience and growing your revenue.

Don’t settle for just measuring NPS

Many companies only focus on their NPS score because it’s easier than analyzing their qualitative data. But uncovering actionable insights from qualitative data doesn’t have to be difficult—even if you have tens of thousands of responses to sort through.

Kapiche can help you uncover actionable insights from any data source within minutes, all with zero setup time. If your NPS survey isn’t delivering the actionable insights you need, Kapiche can help. Book a demo with us today!

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