Who hasn’t heard of the Net Promoter Score (NPS)? The one number you need to grow!
Hats off to those behind the marketing of this metric – promising a simple panacea to all our customer experience measurement woes.
Intuitive, easy to understand and able to be used as a benchmark for those responsible for improving customer satisfaction, NPS resonated with executives and has quickly spread across market research applications in just about every industry you can imagine. It is now touted as the standard measure of customer (and even employee!) experience.
However, following on from the conclusion of my last blog The danger of dumbing it down, I would like to explore why NPS is one of the most pervasive examples of this phenomenon in market research.
Proponents of the NPS approach claim the score correlates with revenue growth and focuses an organisation on improving products and services. They emphasise its simplicity and ease of use as the major benefits.
However is its simplicity really just compromising our insights? Does it just make us feel better we can tie a neat bow on that bothersome need for measurement?
Despite its overwhelming popularity, the claims of this measure have failed to be empirically proven. Furthermore, there is no evidence this measure outperforms other more comprehensive measures of customer experience.
Collapsing the scale to three arbitrary components (Promoters, Passives, Detractors) means significant information is lost and statistical variability increases. NPS is heavily influenced by context i.e. when it is administered, and even some happy customers may avoid recommendations as a matter of personal policy.
What the NPS offers in simplicity, it lacks in stability and utility. A single question, compared to an index made of multiple questions, is much less reliable – critical when used to set goals and measure KPIs. Without follow up questions, NPS arguably gives us a simple indication of part of the ‘what’ but not the whole ‘how’, ‘where’, ‘when’ and ‘why’. This is the information that actually drives actionable intelligence.
Us humans crave simple explanations. Let’s face it – complicated thinking hurts. We tend to clamber for absolutes that appear to provide certainty rather than offer nuance and probability. This is evident from the enduring popularity of NPS among executives despite increasing reports of its lack of reliability and utility when used in isolation.
We only need to look elsewhere at the rise of political populism to see the danger this human desire for simplicity can have on our collective decision making. An easily understood message repeated ad nauseum (preferably crystallised in a slogan) is clearly a powerful thing. However, it won’t necessarily cure what ills you.
While NPS is a very useful way to look at the advocacy construct, it is only one piece of the puzzle. The take away is that regardless of what makes us feel better and seems to simplify a problem – multifarious challenges are rarely solved with one-dimensional solutions. We need to truly embrace the complexity of this world and avoid lazy ‘fast’ thinking that tempts us to believe only in simple solutions. This is the only way to gain advantage in an increasingly competitive market.
Herein lays the challenge for us all.
This blog is the second in a series of blogs on research methodologies.