Thursday, May 17, 2007

Net Promoter Score — Beware the Ceiling

The popularity of Net Promoter Scores as a means to link customer experience execution to financial value creation has been astounding. In just the past two years, American businesses of all sizes, types and structures have begun asking customers about their proclivity to recommend it and the reasons why or why not. Whether you’re a fan of NPS or prefer other methodologies, it would be difficult to dispute that, in the aggregate, this has been a very positive trend that has elevated the consciousness of executives to the link between investing in customer experience improvement and creating shareholder value.

But what happens when we, as consumers, begin getting so many surveys asking about our likelihood to recommend that we become numb? What happens when we realize en-masse that we can end the call quicker by just answering “10” and “no.”

It’s not hard to envision how the simplicity of NPS surveys will eventually lose effectiveness. Familiarity breeds contempt. Respondents will lie with greater frequency. NPS scores will begin to rise — artificially — while the relative competitive gaps begin to disappear. By that point, it will be too late. We’ll have unknowingly made some bad decisions on increasingly flawed data and be left without a transition strategy.

This scenario may not play out for some time yet. But I think it’s helpful to be aware of the inevitability of it; to build early indicators into our current NPS review processes; and to begin imagining what the next solution may look like.

If you’ve had any particular experience with this dynamic, I’d love to hear from you.


John said...

If the scores made a difference to customer experience, isn't it in customers interest to score organisations down so that they try even harder?

Is there any hard evidence that the NPS relates in any way to successful and profitable brands?

Pat LaPointe said...

Thanks for your note John.

Are you an economist by any chance? Many economists assume that consumers will ultimately act rationally in pursuit of maximum utility. This theory would in fact suggest that consumers would provide constructive criticism to help ensure they get a better experience in the future.

However, the reality is that most people, when called on the phone or sent an unsolicited email asking them to take a survey (even a brief one), will either ignore it if possible or answer as expeditiously as possible. I was hypothesizing that would lead them to learn that if they say “10” and “no”, they could get off the phone and back to watching American Idol much faster than if they say anything less than 10 and are pressed to give an explanation for their answer.

There is some evidence that companies/brands with higher NPS scores than their competitors are more profitable over time. There is not as much evidence that this is a causal relationship, but it’s widely accepted by executives these days that better customer experience CAN lead to greater profitability, assuming that it is measurably better than the competitor.