NPS
is one of the most popular metrics used for customer experience. But why is
this method so popular and why is it such a valuable approach for many
companies?

NPS
is a measurement system that allows companies to track the likelihood of
customers recommending an organisation. NPS asks customers to rate how likely
they are to recommend the company to a friend or relative on a score of 1-10,
with 1 being highly unlikely (detractors), 7/8 being neutral (passives) and
9/10 depicting a definitive recommendation (promoters). The goal of understanding
your NPS is to increase promoters, reduce the number of detractors and convert
passives to promoters.

NPS
however, does present some strengths and flaws. For more than a decade NPS has
been used as the yardstick for measuring business success, offering a very
simple and easy to use reference for organisations. The widespread use of NPS
coupled with the duration that the methodology has been used over, offers
organisations who bought into this metric, a benchmark against which to judge
improvements. It also allows for adaptability across industries.

One
of the flaws however in using NPS in isolation, is that it does not pin point
the reasons for customers becoming detractors, passives or promoters, and for
this reason, requires follow up questioning in order to provide a clear idea of
how to improve the current situation. In addition to this, NPS is determined
following a specific interaction, an interaction which may or may not be
indicative of all other interactions that the customer has had with the
organisation. In other words, NPS aims to evaluate the loyalty of a customer in
reference to one specific interaction, as opposed to the full view of the
customer’s relationship with the brand. Furthermore, human nature suggests that
we’re more likely to respond if we have a complaint which we want to voice,
than to praise an organisation, which may additionally sway results.

Getting
a true understanding from the different groups allows one to formulate a plan
to increase activities that lead to promotion, and reduce activities that cause
detraction. What is done with the data however, is what will determine the
success of having an NPS. And how an organisation remediates against this, is
what will determine if NPS improves. 

There’s
no benefit in identifying what drives NPS up or down if the organisation
doesn’t remediate against this. A process needs to be developed to analyse,
prioritise and take action against the insights discovered during this process.
In other words, the way to improve NPS is to have an ongoing and evolving
customer experience strategy, focused on what the customer really wants from
the organisation.

To
find out how Horizon Theory’s approach to Customer Experience can help your
company to create a sustainable competitive advantage, please get in touch with
us.

             
Ref: Retailwire.com, Experience Matters blog


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