The Net Promoter Scam:
How NPS is Misleading Your Business

In a recent front-page article titled The Dubious Management Fad Sweeping Corporate America, the Wall Street Journal identified some of the problematic details of the now-ubiquitous customer survey system, the Net Promoter Score, which, according to the journal, has developed “a cultlike following among CEOs in recent years”. Our immediate reaction is in agreement with the issues raised by WSJ. In fact, we have found many other reasons to be sceptical of the validity of NPS results over the years (Must Read: 7 Points to Consider Before Using the Net Promoter Score).

The article draws attention to the increasing frequency with which NPS scores are touted by large corporations in earnings reports and conference calls. Indeed, last year alone NPS was cited more than 150 times in briefings by fifty different S&P 500 companies, an increase of more than 4x the mentions and almost 3x the companies over this time five years ago. With such growth fuelled primarily by widespread dissatisfaction with traditional customer satisfaction measures and the greater simplicity of NPS, you might wonder what’s so bad about such a universally adored system.

The Problem with Net Promoter Scores

We believe that NPS scores are, at best, a crude approximation of customer sentiment, and its rapid spread is itself reason to question its reliability. While the Journal doesn’t outright make this claim, it does identify numerous factors which justify this conclusion:

1. “Out of all mentions the Journal tracked on earnings calls, no executive has ever said the score declined.”
2. “Some data scientists said the way NPS is calculated increases the margin of error and requires a large sample size to get useful results.”
3. “Research shows NPS tends to be higher when response rates are lower.”
4. “It has become harder to elicit a response these days, survey firms said.”
5. “Email response rates are usually less than 5%.”
6. “The results are easy to manipulate, whether intentionally or unintentionally.”

The article goes on to give examples of how staff game the system, which is particularly rampant when reviews, pay and bonuses are at stake. Employees share tips and tricks to boost scores, and customers are unwittingly involved in the sweepstakes.

How NPS is Affecting the Customer Experience

By now, nearly every consumer in the developed world is familiar with the infamous referral question and its 11-point scale. In many face-to-face situations, people are beset by employees begging to be scored 9 or 10 so their children will have food on the table (Must Read: Hoping For a Top Score?).

Customers are catching on. Those who are genuinely pleased with the service or are brow-beaten into submission by overeager employees may continue to respond with high scores, but those who are displeased, indifferent or put off by the badgering and constant exposure to NPS surveys simply won’t respond. This results in decreasing response rates and scores skewed towards what NPS refers to as ‘promoters.’ No wonder NPS scores continue to rise despite the widespread feeling that customers’ experiences are not improving at the same rate.

Of course, these higher scores look great on paper and make executives very happy, however inflated results serve neither objective analysis nor value. These businesses are kidding themselves and, worst of all, cheating their customers of great experiences. They are lulled into complacency by a doped-up sense of customer affection; missing vital opportunities for improvement and inspiring less brand loyalty than they think.

An Alternative to NPS

There comes a time when the bubble bursts on most fads. NPS is nearing that time of over saturation and its value will diminish. With almost every company large or small utilising it, there is the further issue of NPS no longer aiding differentiation. Rather, an industry-wide focus on ‘best practice’ and competitive benchmarking stifles innovation.

Suspect from its inception, NPS has always been a blunt instrument with which to measure customer satisfaction. As respondents become even more resistant, companies will have to make a choice: either abandon it in favour of better-equipped alternatives, or continue to delude themselves with potentially costly consequences.

One such alternative is to rethink the satisfaction survey. If you can unearth your customers’ exact expectations, accurately and in their own words, you can more precisely measure the gap between each expectation and your own performance. Unlike NPS which provides no useful information without further examination, expectations data is fully diagnostic; shining a light directly on what needs improvement and indicating high priority areas.

The expectations voiced by customers constitute the collective view of the ideal Customer Experience (Must Read: The Magic of Customer Expectations). After all, the unfiltered Voice of the Customer is hard to deny, and gaming such a system is nigh-on impossible. This very 21st Century model can guide your own CX efforts effortlessly, resulting in tangible benefits like increased customer retention and a more robust bottom line.

If you wish to discover how Promising Outcomes can help you achieve this, contact us below for more information.

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