Most of us understand NPS. Many B2B companies currently capture and compare NPS scores. Many B2C organisations rely on Trustpilot reviews of their products or services. There are of course many other platforms to provide customer satisfaction scores and feedback, depending on your wares. However, despite copious exposure to the measure, we can’t quite shake the feeling that NPS fundamentally misses something. So, today we ask is anything better than NPS?
NPS as a measure of loyalty
NPS is, quite simply, a question that most of us has answered at some point. It asks, “How likely are you to recommend x to a friend or relative?”. The ‘x’ represents a company, a brand, a product or a service. The rating is typically on a scale of 1-10. Sometimes, the question is followed by the chance to explain why or a box to add comments. Theoretically, ratings of 7-10 are less likely to leave you and more likely to promote you to others.
Unlike CSAT, which is often an indicator of issues after specific processes or events, NPS infers loyalty. Despite its critics and those who claim that it is open to manipulation, the measure persists. Many organisations target high NPS scores as part of their strategic goals. Others claim that it is a proxy for growth and wallet share, with higher scores more likely to repeat-buy, via upsell and cross-sell. What we cannot deny are the simplicity of use, the ubiquity of the metric and the ease of comparability. The only question is whether the measure is used appropriately, with a sufficiently representative audience and at the right time, to truly reflect customer sentiment and intentions.
Better than NPS?
Although NPS is effectively a market research tool, there are lots of alternatives. Customer Satisfaction (CSAT) surveys and Customer Effort Score (CES) are just two options. The first, whilst well-understood, is reducing in popularity. This is partly because of the time it takes to complete, often requiring incentives, as competition intensifies for a customer’s precious time. There appears to be less desire to capture qualitative feedback, with questions asking “How satisfied were you with x?”. The ‘x’ represents a process, an individual or an issue.
CES is based on the principle that effort is a key driver of loyalty. Low-effort service interactions reduce frustration, reduce callbacks, reduce cost and reduce the chance of becoming disloyal. In our opinion, based on neuroscientific studies of emotion, strong negative emotions play a significant role in customer churn. It goes, “Did we make it easy to resolve your issue?”. The rating uses a scale of 1-7. However, it still suffers from the ‘point-in-time’ problem the same as NPS.
Another way to monitor customer experience
Recent schools of thought lean towards an amalgamation of measures, with no clear link to growth from the others in isolation. For example, a customer with an NPS score of 9 does not have a perfect experience. Your service uptime may have fallen to 99% this month, which could worry customers and lose revenue. Similarly, just because an individual dealt with your issue and you rated the interaction 9/10, it does not mean a content customer. Perhaps, this issue was resolved but it was one of 5 issues that the customer had this month. Finally, a CES score of 6 suggests that it was easy to resolve an issue. But what if you haven’t heard from your account manager in months? The trouble is that none of these measures are ‘live’, they are narrow in focus and provide ‘after-the-fact’ inferences of intention, based on one point-in-time.
Given that many organisations have large data lakes and data warehouses, it seems that we should put it to good use. Similarly, with other techniques to gain rich insights from customer interviews to neuroexperience studies, there is more to learn. Additionally, where NPS is detached from growth and CES is detached from loyalty, we need a more detailed picture. Call it a balanced scorecard, if you will, but it seems that a one-size-fits-all metric is no longer sufficient. Additionally, it could operate across multiple touchpoints, gathering both quantitative and qualitative data. It could also combine metrics that you have with new ones that you don’t to fill in the blind spots. Finally, we could tailor it to your organisational values, your strategic goals and to cross-divisional responsibilities.
Reasons for measuring loyalty differently to NPS
Ultimately, you may be saying to yourself, if it ain’t broke, don’t fix it. That misses the point of what we are trying to convey. What we mean is that NPS is difficult to link to growth, difficult to gain specific insights from and open to missing ‘signals’ before or after the moment. Ultimately, what you really want is to gauge how likely a customer is to leave you, so that you can take preventative action, or how highly they advocate for you to increase wallet share.
Retention efforts, signalled by the appropriate ‘balanced scorecard’, could be proactively taken by your Customer Success team. This would reduce customer churn. Similarly, upsell and cross-sell efforts could be proactively taken by your marketing team, warming up and qualifying new leads. This would increase revenue from existing customers. The opportunity of a bespoke approach is to build an intelligence engine to help you both deepen and broaden customer relationships. As AI tools become better and better, it may just be possible to infer customer intentions from your data, metrics and other feedback signals. So, let’s revisit together if NPS, CES or CSAT are adequate for your business needs.
Beyond a single metric for customer loyalty and experience
Think Beyond both researches customer experience as well as supporting organisations with transformative approaches. There is always a better way and there is always a better way for your specific business needs. So, let us start with your customer experience strategy, your data strategy and your tailored scorecard for customer loyalty. Then, we can work on your customer success and marketing plans to deliver higher retention and revenue.
If you would like to deepen and broaden your customer relationships, you can email us directly to arrange an introduction. Alternatively, why not choose a research option or raise an enquiry online.
Finally, why not read a related article on paying for reviews or another article on CXM and positive experiences.