Benefits and Pitfalls of Using NPS

The transcription discusses the popularity and drawbacks of the Net Promoter Score (NPS), a metric used to measure customer experience. It explains that NPS is based on a single question and categorizes customers as promoters, passives, or detractors. The calculation subtracts the percentage of detractors from the percentage of promoters to get a score ranging from -100 to +100. However, the report highlights issues with NPS, such as small changes in scores leading to significant swings in the overall score. It also questions whether NPS truly correlates with growth and argues that it lacks the depth and nuance provided by qualitative data. The report suggests integrating NPS with other metrics, conducting qualitative research, and using technology to gain a more holistic view of the customer experience. The importance of institutional curiosity and continuously learning about customer needs is emphasized. Overall, NPS can be a useful tool when used as part of a larger strategy, but it You see it everywhere you turn right. NPSS, NPSS. Oh, absolutely. It's become ubiquitous. It's like the magical number everyone's chasing. From marketing to the C-suite, everyone's talking about NPSS. Yeah. And two-thirds of the Fortune 1000 are using it, so it's gotta be important, right? Yeah, it's definitely become the go-to metric for customer experience, but. But is it all cracked up to be? That's what we're diving into today, the Net Promoter Score. What's the hype all about, and what do we need to watch out for? Sounds good. So before we unpack all that, let's start with the basics. What exactly is NPSS? Okay, so at its core, NPSS boils down to one deceptively simple question. On a scale of zero to 10, how likely are you to recommend this company, product, whatever, to a friend or colleague? And based on their answer, customers fall into three categories. You've got your promoters, your passives, and your detractors. Right, the promoters are the ones shouting your praises from the rooftop. Exactly, nines and tens. Then you have your passives, kind of, sort of happy, maybe a seven or an eight. And then, of course, the dreaded detractors. Yeah, those are the ones who are telling everyone they know not to use your product. They're the zero to sixes. And how do we get to that magic NPSS number from all that? You subtract the percentage of detractors from the percentage of promoters. So it can range anywhere from negative 100 to positive 100. Okay, so simple enough, right? Ask a question, do a little math, boom, you've got your NPSS score. Right. But then this report dives into how that one number, that score, somehow gets presented differently to everyone. Yeah, it's pretty. CEOs hear growth, CFOs hear ROI, investors hear customer centricity, everyone's happy. It's true, and it's easy to see the appeal. Simple to understand, easy to track, you can benchmark against competitors, even use it for employee bonuses. But is it really that straightforward? That's the question. Well, the report argues that NPSS's simplicity might actually be its downfall. They highlight this thing called double penalization. Basically, even small changes in those zero to 10 scores can have a big impact on the final score. Really? If that's sensitive. Yeah, so say a company has a great NPSS score, like an 80, things are good. Then there's a tiny dip in customer sentiment, maybe a website glitch, or a product delay, nothing major. But that average recommendation score drops just a fraction of a point, say from an eight to a 7.9, doesn't seem like much. But with this NPSS calculation, it can cause a nine point drop in their overall score. Whoa, nine points, that's huge. Yeah, suddenly they've plummeted from an 80 to a 71, alarm bells are ringing. From a tiny little fraction of a point. Exactly. That's wild. And it makes you wonder, what are we really measuring here? The report calls it the secret sauce of NPSS, this dramatic swing. Right. But it kind of feels like maybe a statistical illusion, right? I mean, a nine point swing based on, what, a tenth of a point difference. It makes you think, doesn't it? It does, it does. So is NPSS more about perception than reality? So NPSS is simple, it's trackable, it's got this whole aura around it. But this report doesn't shy away from the downsides. There are some big buts here. Definitely. And this is where it gets really interesting. So let's dig into those drawbacks. Okay. Let's talk about the big question everyone's wondering. Does NPSS actually equal growth? Right, right. Because everyone assumes it does. Yeah. High NPS, company's doing great, must be growing. Right, that's the assumption. But this report actually challenges that. Yeah, they bring up John Dawes' work. He's skeptical. Yeah, and for good reason. Just because two things happen at the same time doesn't mean one causes the other. The rooster crowing doesn't make the sun come up. Exactly. Correlation isn't causation. There could be a million other factors at play. So true. And that gets to this idea of like what's missing from the NPS picture, right? Yeah. Like trying to judge a movie based on the trailer. You know, you get a tiny glimpse. Right, you're missing the whole story. You miss all the nuance, the character development, the plot twists, all that good stuff. See, it's just one data point. Exactly. And this report, they make this distinction between what they call thick data and big data. Big data's your NPS. It's a mile wide and an inch deep. But thick data, that's where you get the why. Right. The why behind the score. And it makes you think, when was the last time a survey actually got to the bottom of why you felt a certain way? Never. Right. It's usually just a few multiple choice questions and you're done. Exactly. And the report argues this whole simplification thing can lead to this, like efficiency over experience trap. Ah, interesting. Like companies get so focused on fixing the negatives, bumping those detractor scores up. Right, right. That they might miss out on ways to actually wow their customers. Right. To go above and beyond. Yeah, to create something truly delightful. Exactly. And that doesn't always fit neatly into an NPS score. Right, it's more nuanced than that. Totally. And then there's the human element. We all know what happens when you start tying things like bonuses to a single metric. Oh yeah, it's a recipe for disaster. It's like that saying, when a measure becomes a target, it ceases to be a measure. So true. And this report, they call it data gaming. People find ways to game the system. Yeah, they do. You're incentivized to hit that number, even if it means sacrificing the bigger picture. Absolutely. And that's a slippery slope. So we've talked about the potential pitfalls of NPS. But if we're not measuring success solely on this one metric, then what do we do? Where do we go from here? Well, the good news is this report offers some solutions. It's not about abandoning NPS entirely. Okay. It's about being smarter with it, seeing it as part of a bigger picture. And they offer a three-step plan for moving beyond NPS. Ooh, I like a good plan. Lay it on me. First, don't just look at NPS in isolation. Link it to other metrics that matter. Think customer churn rate, customer lifetime value. So connect the dots. See how it all relates. Exactly. Second, figure out what NPS is not telling you. Dig deeper. Ah, there's that thick data again. Exactly. Talk to your customers. Do some qualitative research. Get those juicy insights that a survey just can't capture. Right, right. Get the why. Okay, what's step three? Tech. Find the right technology to support a more holistic view of CX. There are some amazing tools out there that go way beyond simple surveys. Yeah, seems like there's a new one every day. Right. And speaking of going beyond surveys, the report actually highlights a really cool example of a company called Turkcell. They were big on NPS, but realized it wasn't giving them the full picture. Interesting, so what did they do? They got creative. They kept NPS, but layered on other initiatives, like what they call zero-defect service. Zero-defect, I like the sound of that. Right, it's all about proactively finding and fixing any customer pain points. So heading off problems before they even arise. Exactly. And they also focus on creating moments of customer delight, going above and beyond. Because sometimes it's those little unexpected things that really make a difference. Absolutely. It's about understanding the customer journey and finding ways to make it truly delightful. Love it. The Turkcell example is great. It shows that you don't have to ditch NPS entirely. Exactly. Without being willing to see beyond just the one number. And that brings us to what I think is the most important takeaway from all of this. The report calls it institutional curiosity. Oh, I like that. Don't be afraid to question your assumptions. Keep digging deeper. Keep learning. Never stop being curious about your customer. Exactly. That's how you create truly exceptional experiences. Well said. So NPS, it can be a useful tool when viewed as part of a larger strategy. But it's time to think beyond just the score. I agree. We've got to embrace the complexity of the customer experience. Messy and wonderful and constantly evolving. It is. And that's what makes it so fascinating. So as we wrap up this deep dive into NPS, it really leaves us with more questions than answers, right? And maybe that's a good thing. It's up to all of us to keep asking those questions, to keep digging deeper into what our customers truly want and need. Thanks for joining us on this deep dive. Until next time.