NPS: Focus on the Result, Not the Terms

Customer satisfaction is one of the most important objectives for all contact center executives. Companies measure this outcome in numerous ways. According to Aberdeen Group's "NPS: Are you Measuring Customer Satisfaction Correctly?" study, the most common approach, used by 36 percent of organizations, is a numerical scale allowing customers to rate their own satisfaction (e.g., on a scale of 1 to 5, where 1 indicates highly unsatisfied and 5 indicates highly satisfied).

The second most common approach is analyzing customer behavior. In other words, seeing how buyers vote with their wallets. Thirty-four percent of businesses surveyed reported that they monitor results, such as percentage of client renewal rates, as an indicator of customer satisfaction. The third most common approach, used by 30 percent of firms, relies on Net Promoter Scores (NPS). This is a metric that measures the likelihood of customers recommending a company's products or services to others. Based on their answers, customers are then grouped into three groups; promoters, passives, and detractors.

The assumption many organizations make when using NPS is that, if a customer falls into the promoter bucket, it means that he is actually satisfied and will promote the brand to his professional and social networks. On the contrary, if the customer falls into the detractor bucket, it means he's had an unsatisfactory experience and is not likely to recommend the business to anyone else. On the surface, this logic makes sense. An unhappy buyer is unlikely to recommend products or services to peers, and a happy buyer is very likely to do so. However, do promoters really end up promoting the brand? Alternately, do detractors actively spread bad word-of-mouth?

We asked the 154 businesses that took part in our "CEM Executive's Agenda 2016" study these same questions. The results were truly surprising. Of all the respondents using NPS as a measure to gauge customer satisfaction, 28 percent don't know if buyers who are categorized as promoters actually promote the brand. Those that claimed to know the percentage of promoters spreading positive word-of-mouth indicated that only 29 percent of such clients actually do so. If this is in fact the case, then it would mean that two-thirds of buyers who are assumed by brands to share positive or negative word-of-mouth about the company actually don't do that.

NPS is ultimately a representation of customer sentiment at the time of measure. It doesn't truly represent behavior such as client referrals. As such, companies relying on NPS must use this metric for what it's intended—to gauge customer satisfaction levels—instead of assuming that it also provides directional insights into organizational success in driving brand awareness or word-of-mouth activities. Therefore, contact center executives looking to assess their performance can still rely on NPS. However, gauging success in accomplishing other goals, such as driving customer referrals, must be done through other metrics, including the number of positive social media mentions.

In summary, terms such as promoter and detractor often confuse organizations about the insights provided by NPS programs. Don't assume that the percentage of promoters within your NPS survey is the percentage of your buyers actively sharing positive word-of-mouth about your brand. To gain insight into word-of-mouth activities, we recommend using a voice of the customer (VoC) program. These can effectively reveal the positive and negative word-of-mouth activities related to your brand happening across multiple channels.

Omer Minkara is research director for contact center and customer experience management at Aberdeen Group.