About customer feedback and improving performance
Last week a performance manager of a multinational asked me whether how they were doing with using the Net Promoter Score (NPS) as their main driver for improving performance.
In the lively discussion which followed I explained that I don’t have any problem with using NPS as one of the main drivers … but I have an issue with using just NPS or having NPS as the main driver. Let me explain why …
NPS, as described by Fred Reichheld in 2003, is about ‘the ultimate question’ whether your clients would recommend your company, your product(s) or your services to others. This based on the overriding idea that loyal customers are the most valuable resource a company can have. Not only because repetitive business generates revenue and therefore drives performance, but also because NPS insights can help firms find new audiences, improve products and services and open up new opportunities.
Many multinationals around the world are using NPS as Reichheld describes in his latest book ‘The Ultimate Question 2.0’. Hence there is no prove of any statistical link between using NPS and the profitability of a company.
The NPS score is calculated by deducting the percentage of ‘detractors’ (rating your company, product or service with a 6 or lower) from the percentage of ‘promoters’ (rating your company, product or service with a 9 or 10). It looks so simple. And that’s why I tend to say: “If it looks so simple, most like it’s too simple to be true”.
My main worry is, especially when using NPS in an international context, is the cultural aspect. NPS scoring does not take the cultural differences into account. In some countries an 8 is already a great score … and why is a 9 equally important as a 10?
And even more important … rewarding your company with a 9 or 10 does not automatically means the person will recommend your company or even buy from you a next time. There is no question asked why a client rates you with a 9. Clients are more complex than the NPS formula suggests.
Again, there is nothing wrong with using NPS as long as you’re sure it’s relevant within your industry and as long as it’s not your only measurement. So if ‘Customer Excellence’ is all what counts for your company/organization and make sure you have a ‘balanced scorecard’ in place covering other aspects besides just NPS. With KPIs measuring items, directly related to customer satisfaction, which can also be influenced by you and your organization.
As mentioned above, I believe in repetitive business generating revenue and driving performance but besides NPS scores there are other options (e.g. effective customer surveys or even ‘neuroscience surveys’) to assure a careful analysis and collection of feedback from your customers.
BearingPoint’s consultants combine a sound knowledge of your industry with a clear insights on performance management, KPIs and balanced scorecards. They are keen on helping your company create its future, achieve its goals and transformation with our intelligence solutions. So if you want to get into the ring with experienced consultants from BearingPoint you can always get in contact with me by simply sending me an email using: email@example.com.