I have been hearing and reading quite a lot of criticism of NPS recently. Unfortunately, only a minority of what I have heard and read could be considered reasonable. The majority of the thoughts expressed have been... (This is me struggling to find a polite word...) short-sighted. And of course, many criticisms originate from companies trying to sell more complex solutions.
First, please let me be clear about one specific thing NPS is the best CX metric we have simply because it is the most broadly understood, researched, and easiest to communicate. NPS and every single other survey-based metric can suffer the consequences of poor-quality survey methodologies. If you have biased survey processes, low response rates, and are not asking the correct people to answer, you will not get the results you need. And of course, if you do nothing to understand the input and take action both internally and externally, you are wasting everyone's time and money.
Now for some subtleties. Well, I don't find these subtle, but you may:
- The recommendation question behind NPS is the best revenue trend predictor of any single question in most but not all industries.
- This implies that other questions may be better than the recommendation question for specific purposes. The Customer Effort Score question has been compellingly shown to be superior for feedback after contact center events, for example.
- There are industries where other single questions may be better revenue predictors. Indeed, Reichheld and Markey use Enterprise Rent-A-Car is one of the main examples used in The Ultimate Question 2.0 and they used 'overall experience' as their ultimate question. In short, if you don't yet have the data that proves that a different question is a better brand-level revenue predictor, you should use the recommendation question as your baseline. You can study the predictive value of other questions as you go along.
A further thought is that NPS will continue to be relevant in the new world of predictive analytics using AI software. The software can take all of your operational data and determine which metrics have the strongest relationship with customer retention.
Are the main objections to NPS legitimate?
Previously, I researched what those who do not support NPS have been writing over the years, and then wrote an article listing the objections I know about and what I think of each.
Here's a summary of these thoughts.
‘Compound metrics’ are better predictors of revenue and market share trends than NPS’
Yes, this is true in many cases. It is possible to design and implement more sophisticated measurements that are better predictors and a number of them exist. Reichheld and Markey have never claimed otherwise. Reichheld’s original contention was simply that the recommendation question was the best single-question predictor among those studied, for the majority of industries.
The issue with compound metrics and the reason none have ever caught on is that they are extraordinarily difficult to explain. And because they are not common, every single communication about the results has to start with an explanation of how the metric works. Too boring. Audiences go to sleep, no matter what the value of the sophisticated metric is.
The issue with compound metrics and the reason none have ever caught on is that they are extraordinarily difficult to explain
The recommendation question is not always the best or most predictive single question to ask
Yes, that is true and Reichheld says so in his 2003 HBR paper. Indeed, he refers extensively to Enterprise Rent-A-Car in his paper and the question they ultimately used and that turned out to be a great predictor for them was ‘Please rate your overall satisfaction with your rental’.
When eBay implemented NPS their target customers were people making their living selling things on eBay. They found that when they asked the recommendation question they got answers like “No, I am never going to recommend to a friend that they should compete with me on eBay.” So they implemented “How likely are you to continue selling on eBay?’ and continue to use that question to this day.
Lots of other things affect growth more than NPS
That is certainly true in some industries. Overall, Bain and my own research suggest that NPS scores predict between 20% and 60% of revenue / market share trends, depending on the company. There are clearly industries where external factors drive 100% of the revenue and customer satisfaction will drive market share only.
Take gold sales. Revenue depends on the price of gold. Market share will partly depend on how customers feel about you compared to your competitors. Where there are monopoly providers of essential resources like electricity, customer sat has no effect on revenue, as should be obvious. You can the relevant information from Reichheld and Markey here.