A fair amount of scepticism has been pointed at the Net Promoter Score (NPS) recently, in particular relating to the way that it’s practiced.
Not only did the Wall Street Journal label it a ‘dubious fad’, but Forbes has also gone on to suggest it’s time to retire NPS (in this article), stating “… it’s about time! About time that someone has realized that American businesses’ favorite metric, the Net Promoter Score (NPS), is nothing more than management snake oil, that is.”
Pause for thought indeed.
To add fuel to the fire, this recent news headline on stuff.co.nz poses deep questions about the common practice of using the NPS metric to incentivise people.
It was revealed this week that ANZ Bank sacked staff who deleted customer email addresses from files, fearing they would give bad feedback about their service.
Staff at other banks were also putting significant effort into avoiding customer satisfaction surveys, one bank worker said.
“Some branch managers are also encouraging staff to be wary of searching or logging customer information in branch when they enquire – this is due to this then flagging as an ‘interaction’ which then gives the potential for these surveys to be sent.
We all know that incentive schemes can drive unanticipated behaviours and this is a classic example. People take actions in ways they can control and these actions often work against the common good.
Dropping angry customers out of the feedback loop is one easy way to keep NPS scores high and help assure a bonus. Yet, looking at it from an organisational improvement point of view, this is exactly the type of feedback that is needed to do better and the customers who give it should be recognised and encouraged.
The WSJ report quotes NPS founder, Fred Reichheld, as saying he is astonished companies are using NPS to determine bonuses and as a performance indicator – saying “That’s completely bogus”.
So if not NPS, then what? What are better voice of customer KPIs that businesses can employ?
If you want a feedback management program that doesn’t have an unhealthy focus on the score – you are best to focus on these three metrics, not the NPS score itself:
- Ensure you’ve got the right people participatingTake a close look at who your most important customers are (individuals and companies). Are they even being asked for feedback? It’s often a big surprise to see that informal/ illicit background processes drop these people out (as the ANZ article shows). Not only are these likely to be angry customers, they’re likely to be important ones too.A revealing and easy metric to calculate is the proportion of top 20% customers who receive a request for feedback.
- Accept nothing less than a high response rateResponse rate is a pivotally important measure of the health of your NPS program. As we have previously reported response rates for many, if not most, NPS programs are dire. It’s an elephant in the room that most firms and their NPS providers don’t want to face up to.How can you rely on your NPS score if only 5 or 10% respond? Are you only hearing from happy customers? What about the angry ones? What about those in the middle who don’t respond because they don’t think their feedback will be listened to?It’s all too easy to fail to properly follow up and to show customers that you really want to hear from them?
- Ensure a high rate of closing the feedback loop A good, positive program focuses on the opportunity that is created for listening and responding, not on the score itself. Most NPS platforms have the facility to sign off the close the loop process. Make this a metric and spend some time looking at the adequacy of the close the loop actions to ensure that they are not being closed off without the action being taken. Doing this well is where the rubber hits the road in voice of the customer programs.
Do you have the right customer feedback program in place? Check here