In the customer insights world, it is truly impossible to escape NPS. NPS has become so synonymous with CX that NPS scores are truly a North Star. But should CX professionals be looking beyond one number? There is an opportunity to explore more impacts of the customer relationship beyond their likelihood to recommend the brand. And with more and more sophisticated analytical tools it seems like more of a possibility to understand the true value of each customer and how best to nurture the relationship.
In a review of a recent HBR article, Net Promoter 3.0, we explore the pros and cons of NPS and what the future may hold for CX insights.[1]
NPS: The Good, the Bad, and the Ugly
In its nearly 20 years of existence the NPS score has evolved from a must have to a nice to have and back again. There are supporters on both side of the NPS debate—some feel it is too simplistic and not telling of the whole picture while others think that the genius is in the simplicity with a number that a whole company can wrap its head around. The overwhelming receptivity of the NPS score made it a clear favorite for a universal truth. Easy to embrace and replicate the NPS score was the key metric in the world of CX.
However, if you take a look at the opponents’ side of the argument they point to a potential vague and divisive number, one that lacks transparency and may leave more questions than answers. And once the NPS score is tied to compensation the story becomes even more muddled with employees potentially conning the system to get the scores they desire.
Exploring Complementary Metrics
In our experience with customer experience, and as the HBR article points out, there are many other complimentary metrics to consider and that the NPS score cannot (and should not) be the ‘be all and end all’ of the customer relationship.
HBR is quick to recommend a different metric that looks at growth over time, the earned growth rate. The earned growth rate measures the revenue generated by returning customers and their referrals and ultimately attached hard data and revenue to the loyalty of customers. One key example of the strength of the earned growth rate is exploring direct-to consumer eyeglasses brand Warby Parker where 90% of new customers come from customer referrals.
A recent Forrester article also points to the fact that the earned growth metric requires stakeholders to define a new customer as either earned or bought and that discussion alone is valuable, it forced then to acknowledge that too many companies still spend a lot of money in acquiring new customers who won’t becomes profitable in the long run.[2]
Combining different metrics and models can help to paint a fuller picture of the customer scenario and offer insights in how best to tailor strategies with both new and existing customers.
Make Way for the Machines
Where NPS surveys may have been the only way to gather customer feedback in the past, there are now more options than ever to gather feedback in a more real time fashion. The use of machine learning and social listening is rampant and ripe with content to gather from. Online forums are brimming with consumer feedback without even needing to ask consumers how they feel. By categorizing consumer sentiment as positive, negative, and neutral and then tracking over time can be a clear indicator for brands.
More refined machine learning can take this ‘buzz’ listening one step further as well by developed more structured and refined listening models. These models can help benchmarking and tracking of performance against competitors over time.
Customer Experiences are Complex
The bottom line is that customer relationships are not singular in nature, they are multi-faceted, deep, and complex. As such, it is perhaps unfair to think that one singular number can represent the entire experience they have with a brand. Given the nature of the industry or the business it is important to explore the customer relationship and the best metrics to fit the needs of the business.
At empatiX we are humans exploring other humans and deeply entrenched with the complexities that come with that. We work with clients to design the right customer experience programs to meet the needs of the business, and what best aligns with their customers. Say hi hello@empatixconsulting.com
[1] “Net Promoter 3.0” HBR. December 2021. [2] “Earned Growth: A Boon Even for Companies That Cannot Implement the Metric.” Forrester. November 18, 2021.
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