Article

Piyush Gupta
Piyush Gupta 17 February 2020
Categories B2B, Customer Experience

Net Promoter Score: Expectations Vs. Reality

NPS is hailed to be a simple and proven way to gauge customer feedback. Heads-up! NPS is not a magic wand.

If you are sending out a Net Promoter Score survey for the first time, your expectations can get the better of you. It is normal to expect Net Promoter Score Response Rate to give answers to all the troubling questions your business could be facing.

After all, NPS is hailed to be a simple and proven way to gauge customer feedback. Heads-up! NPS is not a magic wand. Don’t be disheartened if NPS doesn’t turn out to solve the problems you want to solve. The reality of NPS could be different

Every marketer who has been using net promoter score software knows that expectations are far from reality. Here are some expectations and the realities that you ought to know. They will help you plan better surveys in the days to come.

Here's Expectations Vs. Reality:  The Net Promoter Score®

Expectation: NPS is a measure of business profitability
Reality: NPS is a measure of loyalty

A high NPS score does not warrant business profitability. Business profitability is influenced by several internal and external factors. It includes several market dynamics like demand and supply which NPS does not cover.

NPS is a measure of loyalty on a scale of 0 to 10. When we see loyalty, it measures customer loyalty as well as employee loyalty and to calculate net promoter score. Customer loyalty is a direct result of great customer experiences provided by the product/service. Great product/service stems from passionate employees whose work is valued, who are passionate about what they do and are efficient at delivering great work.

In fact, Fred Reichheld who is renowned for his research and writing on loyalty business models and loyalty marketing writes in his book, “The Ultimate Question” about the importance of growing employee loyalty to win customer loyalty.

Expectation: NPS drives customer experience
Reality: NPS helps identify areas where CX has to be improved

NPS does not drive customer experience. NPS is a metric that is used to measure customer loyalty. It distills several customer feedback questions into one key question that will invoke a maximum response from customers.

The question is usually in the lines of:

“On a scale of zero to ten, how likely are you to recommend our business to a friend or colleague?”

As you can see from the question, the intent is to measure the customer’s likelihood to recommend the business to a friend of a colleague. Along with the primary question, additional follow-up questions can also be added to the NPS® survey.

The responses to the survey will help identify areas where CX has to improve Net Promoter Score. The responses from each type of customer — promoters, passives, and detractors can be further analysed for corrective measures.

Expectation: NPS® is common for all industries
Reality: NPS® varies from industry to industry

NPS® varies from industry to industry and from business to business. There are industry averages, but NPS® does not remain common for all industries.

For example, the Net Promoter Score® for banking could be entirely different from the retail industry.

Although both the industries work at similar scales and offer similar levels of personalization, the range of services, charges collected and value offered is entirely different. While banks enjoy customer loyalty that spans a couple of years, for retailers, customers remaining for such a period would be a rarity.

Hence, every business should strive to compare their NPS® with industry averages and NPS of competitors in the same industry. That gives a fair picture of how efficient the business is in winning and retaining customer loyalty.

Expectation: NPS is universal
Reality: NPS is regional

Any business that operates on a global scale, would expect NPS to reflect a fair view of its customer loyalty. But, the reality is, Net Promoter Score needs to be measured on a regional basis. Customers hailing from various regions, ethnic backgrounds, and socio-economic values will have varying levels of customer loyalty.

For example, customers from developed economies and customers from developing economies would have an entirely different set of value expectations. Even their desired pricing bandwidth expected features and mode of service would be entirely different.

The reality is, Net Promoter Score response rates vary from region to region. While American customers are generous when it comes to giving NPS® scoring, European and Asian customers stick to giving moderate scores. Hence, it is necessary that businesses analyze NPS® on a regional basis and not on a universal basis.

Expectation: Your business should be big to use NPS
Reality: NPS is for all kinds and size of businesses

Quite often, startups and growing businesses wait until they hit a magical number of users/customers before they roll out their Net Promoter Score Survey®. While it makes sense to have some decent population to whom the survey can be sent, the reality is — you don’t have to wait.

There is no best time to start something good. You can run surveys even with a handful of users if they represent the ideal target audience of your business. What matters is that you get the maximum response rate for the survey. The survey responses can help you steer product development in the right direction.

Final thoughts

When the Net Promoter Score was first introduced, many users presume it to be a vanity metric that does not offer tangible value. They had high expectations out of the metric and when it did not meet those expectations, it was written off as a vanity metric.

With the progress of time, Net Promoter Score started gaining traction as a metric that can show the path for business growth. It shed light on issues related to customer and employee loyalty. And then, business owners started realising the truth behind the metric and what it really means.

Today, it is considered to be a vital metric that can answer several questions that a business cannot find on its own.

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