Is Net Promoter Score still relevant?
Written by Support EXP
Since its introduction in 2003, the customer loyalty metric Net Promoter Score (NPS)® has enjoyed massive popularity with companies across all industries, including banks and credit unions.
However, in more recent years, critics have started to question NPS as a standalone measurement for understanding customer satisfaction. This prompts the question, is the Net Promoter Score still relevant?
Yes…and no. NPS can still be useful as a standard metric and broad starting point. But when companies solely rely on this one-question survey, NPS will disappoint.
This article will examine recent criticism, discuss the pros and cons of NPS, and explore whether it’s still a relevant metric for today’s companies.
Key Takeaways:
- Despite being a popular customer loyalty metric, Net Promoter Score (NPS) has been widely criticized as a standalone measurement of customer satisfaction.
- NPS is useful as a benchmark for performance comparison with other organizations, and for identifying friction in customer experiences.
- Businesses should not rely solely on NPS as a CX metric, or misuse it in practice, but it can provide valuable information when used to complement other CX measures.
How Accurate Is a Net Promoter Score?
NPS is criticized on two fronts: first, as a metric itself, and secondly, as a misused tool.
As a metric, NPS has taken flak for its simplistic approach—the score is based on a single question, “How likely is it that you would recommend X (brand, product, or service) to a friend or colleague?”
Customers rank their answer on a scale of 0–10, and in theory, those who answer 9 or 10 are enthusiastic brand supporters likely to recommend your company’s products or services to others.
However, this isn’t always true in practice.
Each customer might understand the ranking system differently, or their actions might not align with what they said on the survey.
Another issue with the survey is simply misuse. Many companies skew the metric through artificially inflated scores. A typical approach is intentionally leading customers to choose a specific answer.
Others rely on the metric as the definitive answer for all consumer satisfaction data, treating it as the gold standard and final word on how the company is doing.
Even the creator of NPS has criticized the misuse of the metric as a standalone solution.
So how accurate is the NPS survey, and is your company’s Net Promoter Score still relevant?
In most cases, the score is still relevant. NPS can be a helpful tool and used as a broad benchmark alongside other more specific surveys and initiatives when used in the appropriate context.
The negatives that critics have voiced in recent years come more from misuse or over-reliance on NPS than the metric itself.
When improving a company’s NPS becomes the sole goal, the standard loses its effectiveness.
Benefits of Using Net Promoter Score
With its limitations in mind, Net Promoter Score is still a useful metric with several benefits.
First, NPS enjoys widespread use and acceptance across industries.
This popularity makes it easy for you to compare your financial institution’s performance to your bank or credit union peers, understanding whether you’re falling short or pulling ahead compared to the competition.
NPS is also useful for identifying friction in the customer journey.
Rather than starting with more specific metrics that target granular points throughout the journey, the NPS can give an excellent overall picture of customer loyalty toward your financial services organization.
After establishing this starting point, you can follow up with more specified questions to understand which areas might be creating friction and which are doing well.
While recent criticism of the NPS metric raises valid points, most of the concern stems from an over-reliance on NPS rather than a balanced use of the survey alongside other measures.
The pros and cons of NPS show why banks and credit unions should avoid depending on a single measurement in the critical area of customer experience.
Ultimately, the end goal in CX measurement is understanding your customers’ expectations. NPS is one tool to help you capture direct feedback you can act on, and then measure progress toward your objective.
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Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.