What Are The Promoters In Terms Of (NPS) Net Promoter Score®?November 13, 2018
What is Customer Experience Journey Mapping?November 15, 2018
What Are The Pros And Cons Of NPS®?
White House Department of Consumer Affair has reported that loyal customers are worth 10 times the amount of their purchase!
How? What does it mean?
Loyal customers are ‘brand promoters’.
They are willing to tell others about their experience with your brand.
They are your marketing tools. Free of cost and the ‘most effective’- more than any other marketing strategy.
NPS is what enables you to calculate this ‘customer loyalty’. It asks ‘How willing are you in recommending our brand to another person?’. It relates one customers experience with the potential for future growth. It provides a ‘factual’ basis for improving the business.
Pros of NPS.
Some of the benefit of this Key Performance Indicator (KPI) are as follows:
- NPS system is easy to understand and implement.
- NPS can gauge almost all types of industries and provides a common score within them to be used as a benchmark.
- It is a cost effective and quick method to interact with customers.
- It provides real time data of the ‘customer experience’.
- Being a scalar entity, NPS data can be gathered over time and over processes to gather customer experience for the complete life cycle.
- NPS provides a simple and informal questionnaire instead of a questionnaire that is detailed tailor-made.
Cons of NPS.
Net Promoter score® has received criticism since it was introduced in 2003. Some of the Cons of NPS are as follows:
- NPS has an inherent bias as customers that are not satisfied are often not willing to answer any feedback either.
- The scale of NPS (0-6, 7-8 and 9-10) doesn’t provide the variation of answer. Like; 0-6 is a ‘detractor’however the final NPS value doesn’t reflect ‘how much of a detractor a customer actually is’
- In itself NPS is just a value without any actual meaning.
- A detailed action plan is to be formulated to interpret and gather benefit from NPS values. Without a strategy NPS can’t be of much benefit.
- NPS aims to make an organization ‘customer centered’ instead of ‘revenue centered’. If skewed too much; it can cause loss to the organization.
- Although NPS is a very simple method of gathering data; its simplicity can be a problem as well; as it doesn’t give the complete picture of ‘Customer Experience’. Free form comment options are generally provided with the NPS questionnaire to counter this.
- Improving NPS seems to many that it will solve all organizational problems. It is often not the case and organizations often lose a lot while focusing too much on improving their NPS scores.
The Pros / Cons and limitations of any system should be well understood so as to gather maximum benefit from it. Therefore, like all Key Performance Indicators (KPIs), it is extremely important to understand when and where and how to implement NPS.