The Benefits and Limitations of Net Promoter Score + How to Overcome Them

The Benefits and Limitations of Net Promoter Score + How to Overcome Them

Like with almost every measure of customer satisfaction there are benefits and drawbacks to measuring NPS. It’s important to recognize that for all the advantages measuring NPS can offer, it is not a complete system. Read on to find out how you can maximize your benefits and overcome any limitations of NPS.

If you haven’t yet, make sure you check out “4 Reasons You Should Be Measuring NPS“!

Benefits of NPS:

1. The big picture

Unlike other measures of customer satisfaction like CES or CSAT, NPS is a measure of overall customer loyalty and perception of a brand over an entire product journey instead of a single interaction. Like my colleague mentioned in “When Should You Measure NPS”, NPS covers everything from “initial marketing and engagement, the sales and purchase process, billing and account management, produce use and post-purchase interaction such as customer support and service”. Therefore, the NPS is a key metric that is relevant and important for everyone – from sales to customer success to product development to marketing to the executive team. A strong NPS reflects well on the entire business.

2. Customer friendly, simple, inexpensive, easy to implement, calculate and track

The Net Promoter Score has a whole host of benefits to do with the logistics of implementing the NPS survey. From the perspective of a customer, NPS surveys are super easy, quick and straightforward to answer. There’s only one main question, “How likely are to recommend us to a friend on a scale of 0-10?” and a follow up question asking the customer to elaborate on why they gave that score. All-in-all, the survey should take no more than a couple minutes to complete. This is a bonus for both customers and the business as each additional question asked reduces the likelihood the survey will be completed dramatically.

Furthermore, the NPS survey both easy to implement and complete. You can vary your delivery method depending on which you find is the most effective. Customers can complete it online (perhaps with a website pop-up), through email or on the phone.The NPS is also a single number that is easy to calculate and track. There are no complex calculations with indices or correlation coefficients. It’s also inexpensive, you don’t need to hire a specialist statistician work out your NPS.

3. Track changes over time

We generally recommend that you survey your customers about twice a year for smaller businesses. This means that you’ll be able to track changes in your NPS and performance over time. Depending on how frequently you survey your customers it is also entirely possible to do month-to-month tracking or quarterly tracking as well as year-on-year tracking. All these different factors may give you an indication if your NPS is affected by something seasonal.

4. Benchmark against competitors

NPS is a globally-recognized and very common measure of customer loyalty. Due to its wide implementation it is pretty easy to use NPS as a benchmark against your competitors in the same industry. Your score gains relevance in the context of how you are performing against your competitors. If your score is 65 and the industry average is 70, you know that your business has some work to do.

Limitations of NPS (and how to overcome them):

1. Always remember to avoid tunnel vision and make sure to follow up

One of the biggest issues with NPS can be the lack of systematic follow up. Sometimes it can be easy to fall into the trap of getting some tunnel vision and focusing on the score as the be all and end all. However, the most important part of the NPS is the feedback generated after the initial question. Fundamentally, the follow up request for feedback is vital as without it, the NPS is just a number. Feedback from detractors is just as important as feedback from promoters as it will give you an idea of which areas will need to improve and insight that can inform your strategy.

2. Be prepared with a plan

Again, the NPS survey is only the first step to understanding your customers. Asking follow-up questions can give you direction to where you need to improve, but then comes the follow-up plan. Say your scores are low in comparison to your industry competitors, what will you do next? You’ll need an action plan for addressing the feedback from detractors. This also may sound mind-numbingly simple, but remember to implement your action plan. Customers can tell if their feedback went nowhere, and it will show on the tracking of your NPS over time.

3. Try to use NPS in conjunction with other customer satisfaction and experience surveys.

If your scores are low, you may want to deploy more surveys to gain more specific insights. While one of the advantages of NPS is that it shows you the big picture –  if you don’t find out more specifics as to where customers are becoming dissatisfied in their journey – it can be a disadvantage. Remember, there are more specific ways to delve deeper into customer satisfaction like the CSAT.

 

About Lucy Li

Lucy is a writer and editor at Displayr. She previously worked in media and the entertainment news industry before making the jump into data science. Catch her scouring the internet trying to find datasets to answer all the crazy questions she has and trying to make pretty visualizations. An Oxford Comma supporter.