Would You recommend NPS To a Friend?
There isn’t a more ubiquitous metric in corporate America than NPS (or Net Promoter Score) and the fixation on it is getting out of hand. Of course, I say this as a willing co-conspirator who just wrapped up Cogito’s Q3 NPS, presented the findings to our senior leadership team and basked in the glory of the praise that typically comes with improving NPS scores.
Now, while I’m never one to deflect accolades, this praise feels a bit hollow because truth be told, I don’t believe NPS provides enough actionable information. At best, it’s a snapshot of how someone is feeling towards a company at a given moment in time, and at worst it can distract and misdirect company efforts.
NPS Is Being Used Out Of Context
NPS has gained a cult-like following among companies in recent years. According to The Wall Street Journal, NPS was cited more than 150 times in earnings conference calls by 50 S&P 500 companies. But while NPS has become a mainstay of business analytics, it has its share of flaws. For one, it is biased. If the customer is having a bad day, doesn’t like one of the company representatives, or is jaded by a previous bad experience, they will likely be a detractor. Secondly, it disregards important differences in score distributions. All people that rate a company between zero to six are grouped together, as are people that rate the company a nine or a ten. There are important differences throughout those ranges that should be considered. And finally, customers can claim they will recommend a company or product to a greater or lesser extent, but it is not proven they will actually make a recommendation in practice. Even the creator of NPS, Fred Reicheld, is astonished that companies are using NPS as a performance indicator, and partially rely on it to determine bonuses. This is specifically applicable in contact centers where someone’s livelihood and professional development can be determined based on this score.
Taking a Stand
I’m taking a stand against NPS, especially in contact centers. Just recently I was helping an agent at a top P&C insurer deploy Cogito’s AI. While evangelizing Cogito’s CX score – an unbiased score that measures customer perception on 100% of calls – I couldn’t help but point out some of the limitations of NPS. I didn’t expect to get the push back from both agents and supervisors on the importance of NPS and how it’s the “North Star” of the company.
When probing on the importance of NPS to this organization, it came out that up to 20% of agent and supervisor compensation is based on this score. What was even more alarming is that less than 10% of callers take the post-call survey that includes NPS. And of that 10% they often only see the most satisfied and dissatisfied callers taking the survey, commonly referred to as the “Yelp Effect.”
So What’s Next
I have seen through my interactions with contact center agents and leaders across the industry that NPS is not going out of style anytime soon. That said, I am striving to generate internal alignment around the true value of NPS and the importance of other metrics like product adoption, customer references, rolling satisfaction and community engagement. I’ll keep fighting the good fight as I evangelize the benefits and limitations of scores like NPS, particularly when variable compensation is at stake.