NPS – what is it REALLY good for…

futurelab default header

To follow up my previous post on the Net Promoter Score (NPS) being under fire, I would like to engage the readers of this blog in a discussion on the use and value of the NPS in itself. I will be listing some (rather random) thoughts and musings on the NPS to get your insights and ideas.

So we break all our (unwritten) rules at the same time – but we think this issue is important enough to focus some attention on, and we really need your feedback, so please read on.

The interesting bit is, I may have misunderstood NPS all along – which is why it made such perfect sense. As explained in my previous, I think it is the wider net, the capture of non-customer promoters (advocates, influencers, whichever you want to call them) that provides true insight into what is going on for my brand. If indeed, as Tim says, the NPS (and therefore comparative research) should only focus on actual purchasers, it would lose half it’s value for me. I’m finding myself in a bit of a paradox here.

Let’s put this in a broader perspective – that of the industry’s search for the holy grail, i.e. proper Word of Mouth (WoM) metrics, and how to calculate WoM value. (See also below)
The key value of the question asked – “would you recommend” over the often used “would you buy (again)” to me is that it catches out a lot of false positives/negatives. The example I gave in my discussion with Tim is that of me being very satisfied with my past experience with a particular brand of car, but not buying it again for the simple reason that my boss has given me a company car…. This would be a false negative in a “would you buy again”-question, but a strong positive in a NPS setting. It captures my value as a brand advocate to the company.

Even though I had an immediate and instinctive positive reaction to the NPS, there have been a number of things that kept bothering me all along. For one, the strictness of the categories. I would say that we should look at the categories more differentiated – both culturally and operationally. What do I mean? Not everyone is as  likely to give a good experience a 10 score, and especially cultural differences weigh in heave – in some countries it is just unthinkable to give such a high score. But, as the main point is to do intra-country comparisons, I can live with this.

But I would also like to see a better differentiation within the categories. For instance, I think there is a massive distinction between a 5 and a 0. The 0 might go out there and pro-actively discourage people from buying with a certain company (picketing in front of their headquarters), while the 5 is most likely to go ‘mwoah’ when asked by me. Put an 8 (who, mind you, is seen as neutral) next to him who goes ‘yes, I had a good experience with that company’ and I will still turn into a customer – even though I only talked to a neutral and a detractor.

Also, the ‘why’ to me does play a strong role, as without that question we may have to deal with a lot of false negatives. Some people might answer ‘no, I am not likely to recommend’. If you ask why – ‘because nobody ever asks me’. I kid you not, this is an answer I have seen a lot. And this is one of the points where the value of a multi-brand analysis comes in for me. I might give a 9 score to Brand X – and still not recommend, because I’m giving a 10 score to Brand Y.

The main point of the current attacks on the NPS is about it’s predictive value towards revenue/shareprice growth. As interesting as that point in itself may be, it is more the profitability of individual customers and how to capture and improve that which to me has the most interest.
A promoter of the company is likely to generate additional sales, pay premium prices, buy more units and cost less in servicing. See the example Dell calculation here :

This all aside, however, I think the true value of the Net Promoter Score as a tool within companies lies simply in the focus on the customer it generates.
Where many marketers are now buried under reams of data, KPI’s, customer satisfaction studies, brandvalue analysis, etc ad infinitum, this is replaced by one single and easy to handle and understand metric. It focuses the organization on concrete results, on “how will we delight” instead of generic customer satisfaction indexes. It creates a dollars-and-cents conversation due to the measurable value of an individual promoter to the company. And again it focuses the organization on precisely that point – to get more profitable customers (insert dollar value here) I need to improve specifically X, Y and Z. “Here you go, dear finance director – my new marketing initiative will generate this ROI for the company, because of 500 detractors being turned into promoters, generating 1000 X, 500 Y and 750 Z. “

To summarise my position – there are a lot of things wrong or improvable about the NPS – but it is the best we have, and warts and all is still a very valuable tool to achieve certains goals within a company.

So – what do you think? A couple of questions to kick off the discussion:
A.    Is the value of NPS in single or multi-brand research?
B.    Does it help you (and your organization) focus, or do you see it as a further distraction?
C.    Do you focus on the money value of promotors of your company?
D.    What else can we learn from or do with the NPS?
E.    Do the flaws of the NPS discredit it as a tool?

We’d like to turn this into an ongoing discussion, so please respond – here, or with a blogpost and let us know.