A Snarketing post by Ron Shevlin, Director of Research at Cornerstone Advisors
A number of observers have eloquently weighed in on the weaknesses of Fred Reichheld’s Net Promoter Score (for an excellent discussion go to Adelino de Almeida’s Profitable Marketing blog). I’ll go one step further.
Firms should stop measuring their NPS. Why? Because the NPS:
- Doesn’t help explain WHY a customer would recommend the firm. Let’s say a bank finds out that 10% of its branches score much higher than the average on the NPS and that 10% score much lower. What has it learned? Nothing. It isn’t actionable. You might argue that it provides clues as to where to dig in… but wouldn’t it be more useful to find out the root causes in the first place?
- Measures intention, not behavior. If there’s one thing market research has taught us, it’s that consumers don’t always do what they say they’ll do. Far more important to most firms is who is actually refers the company to their friends and family — not who might do so.
- Doesn’t capture inherent consumer differences. Forrester Research’s consumer research has found that Gen X and Gen Yers are more likely to recommend a firm to their family and friends than us (cranky, crotchedy) Baby Boomers. So if your NPS increases from one year to the next, is it because you improved the products and services you deliver, or does it simply reflect an underlying change in the demographics of your customer base?
- Can incent undesirable behavior. One marketing exec told me about an interaction he had at his car dealer’s repair shop. When he arrived to pick up his car, the shop manager said “if there’s any reason you wouldn’t check off the ‘likely to recommend’ box on the customer satisfaction survey, please let me know before filling out the survey.” Do you want your firm’s personnel running around asking customers to say they’d refer the firm to friends and family — or doing the things that earn a referral?
- Uses funds better deployed elsewhere. Measurement doesn’t come for free. Firms that have built an infrastructure to measure customer satisfaction are now being encouraged to build an infrastructure around measuring NPS. It’s not worth it. There are better things to measure — like what causes a customer to refer a firm in the first place.
It’s been said that you can’t manage what you don’t measure. But a metric that doesn’t help you manage isn’t worth measuring. And the Net Promoter Score is a measure that doesn’t help you manage.