Is NPS a Good Metric?
Written by Support EXP
When researching marketing solutions for your business, it can seem like many firms offer a silver bullet approach: a one-size-fits-all metric that will revolutionize your customer experience, boost satisfaction through the roof, and send customers pouring in from all directions.
Often, you will see companies advertising the Net Promoter Score (NPS)® as the solution, but is NPS really a good metric for gauging and improving customer loyalty?
Like most things in life, the answer is nuanced. There are no one-size-fits-all consumer experience metrics, so the big question is: What are you trying to measure? Then you have to ask whether NPS helps you achieve your goal.
As a standalone, NPS isn’t going to revolutionize your company. However, combined with other customer experience management techniques, it can benefit your business in significant ways.
This article covers the basics of NPS, the areas where it’s particularly useful, and pitfalls to watch out for when using NPS to determine customer loyalty.
Key Takeaways:
- Net promotor scores provide excellent benchmark data for your brand, product, or service.
- NPS tells you where you stand with customers.
- Use NPS scores to dig deeper, strategize, and improve customer relationships.
Why Use Net Promoter Score?
Companies often use Net Promoter Score for a few simple reasons.
First, it’s a straightforward concept. The Net Promoter Score asks customers to answer one question: “How likely is it that you would recommend X (brand, product, service) to a friend or colleague?”
Respondents answer on a scale of 0–10, and more enthusiastic 9s and 10s mean a higher NPS.
Because the rating scale is simple, many companies use it as a benchmark. In 2020, two-thirds of Fortune 1000 companies used the NPS metric.
This popularity means that you can easily compare your NPS to the scores of hundreds of other companies, giving you a good idea of where you sit compared to your competition.
So again we ask the question, is NPS a good metric? It depends on what you’re looking for out of the brief survey.
If you’re expecting a comprehensive summary of your customers’ feelings about each aspect of their experience with your company, NPS isn’t the answer – it simply wasn’t designed for that.
However, if you want to understand if there’s friction in the customer experience, NPS can certainly help.
The metric divides customers into three main groups: Promoters, Passives, and Detractors.
Promoters
Promoters rate their enthusiasm as a 9 or 10, a sign that they’re thrilled with the brand experience and will likely recommend you to others.
Passives
Passives rate their interest at a 7 or 8. They’re not dissatisfied, but they probably won’t go out of their way to sing your praises to anyone.
Detractors
Detractors rate their customer experience at a 6 or below. These people are the ones who likely did not have a good experience and who might even warn others about your company.
Knowing your Net Promoter Score can be a useful starting point in creating a broad picture of how actual buyers are experiencing the customer journey.
From this initial number, you can use other metrics to dig deeper into what drives NPS. Maybe customers love your website but are frustrated with the in-branch experience, or perhaps they appreciate your rates but have struggled with customer support.
The bottom line? Don’t expect NPS, by itself, to be your one-stop-shop on your journey to improve customer loyalty.
However, as a metric to help you understand the big picture, NPS is still relevant and can be a helpful tool.
Why NPS Matters
Why should your company care about NPS results?
First, the metric matters because it’s one of the most widespread indicators in business today.
If you use NPS, you’ll be able to easily compare your performance against that of other companies, analyze what they’ve done to improve their scores, and make peer-to-peer comparisons with similar organizations.
Other metrics are less popular, and there’s not as much available data, making comparisons a challenge.
NPS is also a convenient metric for its broad summary of where your company stands with customers.
While one of the metric’s pitfalls is its lack of specificity—it doesn’t tell you, in itself, the specific areas that are concerning or appealing to your customers—it does give you a quick snapshot of your company’s overall health and popularity with customers.
There is no silver-bullet solution in the world of customer experience management, and customer loyalty metrics like NPS aren’t an exception to this rule.
When used properly, the Net Promoter Score can become a valuable tool as a starting point for a comprehensive strategy that seeks to identify and improve friction points in the customer journey.
To get the most out of NPS, you can’t stop with the number. You’ll need to dig deeper into what drives your NPS. Analyze which underlying factors might be creating Detractors or areas that need improvement to move people from passive customers to active Promoters.
When you use the Net Promoter Score as a broad benchmark rather than a single solution, you’ll find that the metric can give you valuable insights to improve customer experience and pave the way to bring in more excited prospects.
Have More Questions? Reach Out to Our Team Of Experts
Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.