The metric NPS (Net Promoter Score) was introduced by Fred Reichheld from Bain in the year 2013 and is still considered as the most popular metrics used in business to evaluate and measure their customer experience while using an easy to use CRM for consistent business growth .
Now, at its core, NPS is a metric that illustrates customer loyalty that is used as an index score between 0 to 10 and is evaluated by asking the customers about the likelihood to recommend your brand and business or your offerings to anyone in their friend’s list.Businesses that leverage CRM software see sales increase by 29%, sales productivity increase by 34%, and sales forecast accuracy increase by 42%. Click To Tweet
The easiest way to calculate Net Promoter Score is by subtracting the Detractor from the Promoters of your offering(s).
Customers who scored:
0-6 are conceived as Detractors (customers those who have a negative perception about your company or your offerings and are therefore less likely to spend on your brand.)
7-8 are conceived to be Passives (customer who are somewhere in between Detractors and Promoters.)
9-10 are conceived to be Promoters (customers who have a positive perception of your company or your offering and so are more likely to purchase from your brand and even recommend your offerings to their friends, neighbors, and relatives.)
Therefore while calculating Net Promoter Score a scale of 0 to 10 is used for measuring which customers are Promoters, Passives, and Detractors of your company.
Now, given the changes and evolution in Customer Experience (CX) evaluation techniques, new and fast-emerging technologies and Big Data- does NPS (Net Promoter Score) still remains the best and effective metric to determine the health of your company’s CX and predict customer loyalty?
Well, there are several organizations using Salesforce or even Salesforce Alternative CRM for startups and small businesses would argue that NPS is still useful and relevant to their company for reasons as mentioned below:
It is simple to implement
Companies just need to ask one single question to predict the customer’s loyalty for their brand, which can be easily done via surveys over email (using easy to use CRM ), phone or even third-party survey providers, without the requirement for waiting for more complex and detailed researches.
It is easier to benchmark CX against competitor and industry
The measuring methodology of NPS is a globally standardized method, which makes it convenient for brands to compare an “orange” with an “orange”.
This is because the likelihood to recommend the specific brand, rather than attributes of products and services or different components of the customer journey (which may be unique to each brand) makes it simple for everybody to understand and interpret that if the NPS is going up or down.
Moreover, businesses can ask follow-up questions to the customers in order to understand why they are providing the scores, which can help businesses to more effectively pinpoint the drivers of loyalty for their organization.
Additionally, NPS is capable of driving collectible accountability in delivering Customer Experience and so having a steady and dependable KPI for all employees that can persuade employees to work together more effectively and collaborate for a common and unified CX goal.
Nevertheless, putting these benefits aside, there are also many constraints and limitations of NPS, which are often linked with the methodology design and implementation approach of this metric as explained below.
Therefore the most common NPS challenges that we view include:
Although NPS may be one of the most popular metrics, however, NPS provides limited insights into the true health of a customer’s experience and cannot be relayed upon as a true predictor of a customer’s inclination to be loyal and therefore purchase more from your brand.
This is because understanding any customer’s desire to buy would more often than not require a more specific intent to repurchase questions along with the standard NPS question that you ask your customers for measuring their loyalty for your brand.
While there are organizations those that implement NPS more successfully than others frequently include follow-up questions in their Net Promoter Score surveys to perceive the root cause of their NPS, these insight are most often not translatable as these are mostly generic questions and hence the customers might not be too specific about answering whether they had a product or service-related issues or the customers were generally dissatisfied with one small aspect of their experience with the brand.
Additionally, most often several companies measure the NPS of a specific customer channel like a recent interaction with a caller or a website visit rather than an integrated and ongoing review of the customer’s interaction with the company or a broader review of the customer journey with the brand.
Hence to sum up, just relying on NPS insights and metrics alone to make decision is likely to result in fruitless CX investment decisions and so it can be finally said that instead of getting bogged down by Net Promoter Score companies must also look into metrics like CSAT (Customer Satisfaction) score and CES (Customer Effort Score) to measure the effectiveness of their brand’s Customer Experience to ensure increase in customer loyalty and improve business outcomes over the long haul.