The NPS ( net promoter score) trap

 

group-of-people

NPS (Net Promoter Score) isn’t really a new technique within the research industry, however many businesses are still only finding out about it. In fact, NPS has been around for 10 years, having first been spoken about in a Harvard Business Review article in 2003. Since then, it has become increasingly popular, yet there are many people who question its validity and the impact it has on most of the businesses that use it. Before companies jump into using it, they really need understand the pros and cons.

The first observation that needs to be made is that some people (even within the industry) believe that NPS and Customer Experience Management are the same thing. Fundamentally, NPS is a research technique, whereby the research interviewee is asked a question as to how likely they would be (on a scale of 0 to 10, with 10 being the most likely) to recommend a product or service to a friend or family member.

The psychology behind asking this question is clever. With a customer satisfaction questionnaire, when you ask someone ‘how satisfied’ they are with a product or service, the danger is that they might just give a response without thinking how accurate it actually is; whereas when you ask that person how likely they would be to recommend it to someone else, you’re bringing their personal relationships into play. We all love, care for and/ or respect our friends and family, and either want to protect them, or indeed protect our reputation with them. With that in mind, we are far more likely to carefully consider our response than we would with a satisfaction question.

The way that NPS works is that the number of respondents giving a score of 9 or 10 are considered to be ‘Promoters’ and those giving a score between 0 and 6 to be ‘Detractors’; and then you consider the proportional relationship between these two groups in order to calculate the NPS score. The maximum score that be achieved would be 100 (every customer giving a score of 9 or 10) and the lowest would be -100 (every customer giving a score of 6 or below).

NPS isn’t always straightforward

Although the benefits of the NPS question are apparent compared to CSAT (Customer Satisfaction Survey), NPS certainly isn’t the same thing as Customer Experience. NPS identifies the fact that a business has a problem, however it doesn’t tell you why or how to solve the problem, which is the broader role of Customer Experience Management. NPS can, however, be a very useful tool within a broader Customer Experience Management toolkit.

A business also needs to consider how to use NPS. There are arguments for and against whether NPS should be conducted as part of CSAT or as a separate survey. Arguably, the nature of the CSAT survey could change the mind-set of the person answering the NPS question. There are also considerations as to whether NPS should be carried out at set points in time (e.g. quarterly) or following a specific customer interaction, which is also referred to as Transactional NPS. The benefit of doing it at a set point in time is that the customer is more likely to consider their overall relationship with the business/ brand, whereas with Transactional NPS, the customer is more likely give a true indication as to how they feel at that specific touchpoint and moment in time; enabling the business to focus on/ fix specific issues in particular areas of the business.

Another thing we discovered recently with a client is that NPS results can be misleading if not analysed with sufficient insight and in enough detail. The NPS results, when analysed as a whole, did not seem to reflect the findings of earlier focus group research. That was until the survey results were segmented and then analysed separately.

The client in question had a customer base that could quite easily be broken down into two clearly distinct groups along racial/ cultural lines. Let’s call them Group A and Group B. When focus group research was carried out with both groups, Group A were quite negative towards the client and Group B were quite positive. However when survey research was done with the two groupings, Group A provided a much higher NPS score than Group B.

There are two main observations about this. Firstly, when results of the two survey groups were analysed together, they cancelled each other out, which doesn’t give a true picture. This demonstrates that with a diverse customer base, segmentation should be considered prior to analysis.

Secondly, it is difficult to understand why the results of the qualitative & quantitative research were so contradictory for both groups. Group B, who had been quite positive towards the brand in the focus groups, actually registered a negative NPS. The research company we worked with advised that the culture of the people in group B was very reserved and, by their standards, giving a score of 7 or 8 out of 10 would have been considered very high/ positive. However in NPS terms, a score of 7 or 8 is considered to be neutral. This being the case, for this particular cultural group, the NPS methodology would not give an accurate picture as to how these respondents felt about the company/ brand – an inherent weakness of the technique.

Another consideration is whether NPS is the best possible metric a business can be using.  In recent years, some companies have been moving away from NPS and towards CES, which stands for Customer Effort Score. Advocates of CES argue that, rather than looking at the likelihood of the individual recommending the business, we should consider how much of an effort it is for a customer to deal with a business. In a world in which some people seem to have increasingly less time (cash rich, time poor!), it can be understood as to how the amount of effort that has to be expended by a customer can be considered to be a more indicative measure of their satisfaction. There are a couple of things to consider here. Firstly, in surveys that have used both techniques together, it has been found that the results tend to track/ match each other. Secondly, it can be argued that the validity of each of the two techniques is reliant upon the nature of both the product being sold and the customer making the purchase. For a more generic, utilitarian product with fewer unique selling features, you can see how CES may be of greater relevance; whereas for something like a luxury product, NPS might be better. Likewise, for ‘cash rich, time poor’ customers, CES might be more relevant; whereas NPS might be a better measure for ‘time rich, cash poor’ customers.

In summary, NPS can work well, however consideration definitely needs to be given as to how to apply and analyse it, or even whether a different research technique would provide better results. Furthermore, without any follow-up activity to resolve any issues identified, NPS would seem to be largely pointless – it only forms part of a successful Customer Experience programme.

To know how we can help your organisation deliver exceptional customer experience, contact us.

The right steps to customer journey mapping

Customer Experience is much bigger than Customer Service. The experience a customer gets doesn’t just come from the service they receive. Their experience is also determined by the product and channel propositions, including the product, price, sales channel, promotional and branding activity. They all have an impact on the customer’s experience.

Customer Experience encourages businesses to view themselves in the same way that their customers do. The way the customers think about a company or brand tends to be chronological. Experience doesn’t necessarily just come from a single interaction. Our total experience is determined by our our emotional and functional interactions with that business over time. It is for this reason that Customer Journey Mapping is such a central tenet of Customer Experience management.

Customer Journey Mapping is spoken about a lot, yet it is still misunderstood by some people. A number of organisations I have spoken to over the years, including some of the biggest brands in the world, can still get it wrong. I was once advised by a major financial services brand that they had undertaken a Customer Journey Mapping exercise, only to find that they had simply mapped out their internal processes relating to the production and distribution of promotional materials to customers over time.

There is certainly nothing wrong with the financial services brand undertaking this exercise, however what they were doing was more ‘inside-out’ than ‘outside-in’. This should be more accurately described as mapping a process-flow rather than a customer journey.

So with some of the largest brands in the world still capable of falling short, there is probably no harm in providing a reminder of the fundamentals of Customer Journey Mapping.
1Customer Journey Mapping – The Right Steps…

1. Defining the Customer Experience Journey Framework – The first step of Customer Journey Mapping is to define the generic stages of a customer’s journey. For example, the first stage might be ‘Awareness’ or ‘I’m thinking of Joining’; and the final stage might be ‘I’m Leaving’ or ‘I’m Terminating my Contract’. These generic stages provide the framework around which the rest of the Customer Journey mapping exercise can be built. The stages are typically generic enough that they can be applied across a business or even an industry sector for all journeys, irrespective of customer segment or channel. Furthermore, these stages can be broken down further into sub-stages, or as we at Jericho like to refer to them, phases.

2. Designing the Customer Experience ‘curves’ – Research performs a critical part in Journey Mapping. Using Voice of the Customer, Customer Satisfaction and/ or NPS techniques, the business can assess the ‘performance’ and ‘importance’ of the business against criteria across the customer journey. This might be expectations of an ‘ideal’ provider (possibly determined from the qualitative research element of VoC), or might be the standard aspects of business performance that you might typically find within a CSAT study. The importance and performance scores enable you to plot customer experience curves for the current and ideal performance of the business. The positioning of these lines, both in isolation and relative to each other, also enables you to determine the ‘pain points’ for the business (areas of lowest performance) and the ‘moments of truth’ for the customer (where the gaps between expectation and reality are at their greatest). This information helps the business to understand the scale of transformational effort required and also how and at which points on the journey the transformational effort should be prioritised.

3. Understanding the Existing Journey – Although the Customer Experience curves help you to understand the state of the existing customer journey from an empirical perspective, it does not help you to understand the detail as to why this might be the case. For this reason, it is also important to ‘walk the processes’, which is a diagnostic exercise that involves following the processes of the business as a customer might experience them. This helps you to identify what works well and what causes problems for the customer. This is also referred to as the identification of ‘value demand’ – what activities undertaken by the business drive value for the customer and company – and ‘failure demand’ – what activities undertaken by the business relate to resolving issues or complaints. This exercise can also help the business to identify the reasons for the ‘pain points’ and poor customer satisfaction, helping it to identify where resolution effort needs to be prioritized.

4. Customer Promises and Commitments – When a business undertakes full Voice of the Customer research, which includes the identification and prioritisation of customer expectations, in addition to mapping the Customer Experience curves, the business can also define the ‘Promises and Commitments’ it would like to make to it’s customers, employees and other stakeholders. Promises and Commitments are typically themes that reflect the most important expectations of the customer, for example Trust, Honesty, Credibility, Security, Honour, etc.

Promises and Commitments play a vital role in Customer Experience transformation. Improving customer experience is basically about reducing the gap between what the customer expects and what they actually get (or what they perceive they get!). There are two sides to a gap. Managing customer experience doesn’t just come from making improvements to the product, channel and service propositions, but also by managing customers’ expectations via branding and marketing communications. Promises and Commitments not only provide ‘context’ to the nature of the transformation undertaken to product, channel and service, but are also used to help the business to correctly position its brand, thereby helping to manage customer expectations.

5. Designing Future-State Customer Experiences – The previous steps help you to understand the existing journey in detail, including where the problems exist and why; and they also help to empirically determine what the ‘ideal’ customer journey might be. However until now, there is no detail as to what the ideal Customer Journey might look and feel like. Designing Future-State Customer Experiences is a story-telling exercise that helps you to build detailed narrative as to what the stages and phases of the new Customer Journeys might look, feel, hear, smell or even taste like. This is a behavioural science driven exercise that considers the experience across all customer segments and within all channels, as determined by the business.

Following on from the Journey Mapping activities, the business then needs to undertake gap-closing exercises and initiatives in order to turn the existing journeys into the future-state customer experiences.

To know more about how we can help your business deliver exceptional customer experience, contact us.