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The One Number you Need to Grow – Or is it?
Increasingly companies are considering the use of Net Promoter Score™ (NPS) – a measure of your customer’s willingness to recommend your company to others -as a measure of their customers’ loyalty and/or advocacy.
At its simplest, NPS is a single question based on a customer’s willingness to recommend your company, and is often used as a proxy measure for customer loyalty. I have seen ample examples where NPS can be seen to correlate well with positive customer behaviours like visiting more, spending more, and talking positively about your products or services to others.
There is considerable and long term debate in the research community around the use of NPS, and whether it is the ‘best’ measure of customer loyalty. I have personally been lucky enough to be exposed to a wide range of expert opinion and review. My opinion is that there are a number of ways to measure customer loyalty, some better than others and no one measure that is right for every company … but I do like NPS. Why?
I like the NPS measurement system because I have seen a growing number of companies who have implemented a NPS based program achieving positive commercial outcomes (e.g. increased customer retention, spend, advocacy). My opinion is that these companies do not necessarily have the ‘absolute best’ measure of customer loyalty, but likely do have the ‘right’ measure for their organisation. The reason I believe it is the right measure for many organisations is:
1. Top down buy-in
I have noticed that a number of requests from our clients to help them implement a NPS program have been driven internally by their company CEO (or other like senior stakeholder). The success or failure of any customer engagement program can often be determined by the level of buy-in from the senior stakeholders, and so the drive from the top is certainly positive.
2. Bottom up engagement
I have personally experienced customer experience programs where the design of the primary (or key) outcome measure is somewhat complicated, and cannot be easily understood by those at the front-line (or the top for that matter). Although a more complex measure (e.g. a composite score derived from a number of survey questions) may be a slightly better predictor of future customer behaviour, if it is not easily understood staff will not engage in the program, and it will not succeed.
3. Organisation wide
Generally speaking it is acceptable to use the NPS measure across various touch points within an organisation (i.e. call centre, retail store, online). Why does this matter? Increasingly customers are interacting with organisations using a variety of contact methods, and a customer’s perception of your organisation is not shaped by a single experience within a single touchpoint. As such it is valuable for an organisation to have a single common currency, which is measured and monitored continuously.
I believe (as does the author of “The one number you need to grow”, Fred Reichheld) that NPS is not necessarily the right metric for every organisation; however if the implementation of a NPS measurement system focuses your whole organisation on customer experience improvement, in my mind that’s a good reason to consider using it.
Posted 21 May 2011 by David Griffin0comment
