In recent years the NetPromoter score has become all the rage as a way of measuring contact centre performance.
Lyn Etherington explores what is really behind the NetPromoter Score and what you can do to drive it up.
Research by Fred Reichheld of Bain & Co, together with Satmetrix, led to the development of the Net Promoter Score (NPS) as a measure of customer experience that correlated with business success.
NPS is based on customers’ likelihood of recommending a company’s product or service to others. It is calculated as the percentage of customers who are Promoters (rating the company 9 or 10 on a 0 to 10 scale) minus the percentage of customers who are Detractors (rating the company as 6 or less on the same scale).
This has led to many major organisations embracing NPS as a key performance indicator: arguably, the first time that the customer’s opinion has been truly on the management agenda.
No longer is customer data purely the domain of the marketing department – senior management across businesses are measured, targeted, and, in some cases, remunerated by their NPS.
And, as a consequence, the customer’s opinion matters!
What influences propensity to recommend?
Based upon ‘voice of the customer’ research that we have conducted across a range of service businesses to identify what experience customers truly value, plus literature searches, we conclude that there are 4 factors that determine customers’ propensity to recommend an organisation:
- Brand relationship
- Experience of / satisfaction with product offerings (features; relevance; pricing)
- Ease of doing business (simplicity; efficiency; reliability)
- Touch point experience (the degree of warmth and understanding conveyed by front-line employees)
The relative importance of these factors on a company’s NPS varies across businesses and across markets. However, ‘contact with the company’ – that is, the ease of doing business plus the touch point experience – typically accounts, we believe, for about 60% of the total.
The role of the contact centre on NPS is significant – but is not all that matters
For most operational managers responsible for business functions that handle service interactions with customers or sales, their sphere of influence is this 60%.
This is made up of the ease of doing business with you and the degree of warmth and understanding conveyed by your people.
The drivers of ‘brand relationship’ and of ‘product satisfaction’ – factors such as corporate reputation, product pricing and innovation – are typically longer term and slower moving.
Focus on improvement not on scores
Recognising the importance of the ease of doing business and the touch point experience, as many organisations do, would logically lead them to focus significant effort on improving the experience their business delivers.
However, what is evident in too many organisations that claim to be driven by NPS is an overt focus on ‘their Net Promoter Score’ rather than the underlying drivers of Net Promoter Score and how to improve it.
An obsession with the score
There is an obsession with ‘the number’ but an insufficient focus on strategies to drive improvements in ‘the number’ and consequently the customer experience.
This is limiting the business benefits that should have been gained from focusing on customers’ propensity to recommend.
Even Reichheld has acknowledged this shortcoming and said recently at a conference: “The score, NPS, maybe was a mistake. It’s not the score that matters, it’s what you do with the score to make Promoters”.
How to improve the customer experience?
Companies wishing to improve their customers’ experience (and their NPS) at key touch points should review the themes that come through in research from customers’ verbatim comments:
- What are Detractors saying? And how can we reduce/remove them?
- What are Promoters saying? And how can we create more of them?
- Although not exclusively the case, it is generally true that:
- Detractors are created by perceived shortcomings in the offer, especially price in highly competitive markets, or by the process if it creates complexity, inaccuracy and inefficiency for the customer – essentially not being easy to do business with.
- Promoters are created through customers feeling the company was reliable and ‘easy to deal with’ plus interacting with staff who consistently deliver ‘special’ experiences. Understanding what constitutes ‘special’ for their particular customers provides businesses with significant insight and opportunities to differentiate.
Focus on the Detractors’ verbatim comments
Focusing on factors that are consistently mentioned by Detractors should be the priority for management. Not only are they creating negative word of mouth but they will be leading to re-work; failure demand and unnecessary, frequently significant, operational costs.
In addition, the issues cited by Detractors may suggest that an organisation is attracting the wrong types of customers: people whose needs they cannot satisfy.
The fastest way to increase NPS is to focus on the Promoters
Whilst removing or reducing Detractors should be the priority, this may not always be possible as it may require significant infrastructure investment. Experience suggests that focusing on factors that create Promoters can be the fastest way to increase NPS.
This requires a detailed understanding of what makes customers of a particular business feel ‘special’ – the differentiating opportunities – and then focusing on delivering these special experiences relentlessly.
Ten factors for successful customer experience improvement programmes
- There is a clear imperative for improving the customer experience, i.e. an irrefutable argument that a better customer experience will drive the business forward.
- There is a passion and a commitment to being focused on customers.
- The desired customer experience is clearly articulated and based upon ‘Voice of the Customer’ research.
- The customer experience is of equal importance to other business imperatives such as revenue targets and operational efficiency.
- The customer experience is analysed and managed holistically – end to end.
- There are processes in place to examine and act on root causes of poor customer experiences and service failures.
- Priorities for action are determined by the ‘Delivery Gap’ – the gap between the desired experience and the actual experience.
- Everyone understands what customers’ value (and what creates Promoters) – and focuses on delivering this relentlessly.
- Management get personally involved at the customer interface – interacting with customers and consulting with front-line staff.
- Customer feedback links directly in to training, rewards, recognition and internal communications.
Lyn Etherington is Managing Director of Cape Consulting
Tel: 07973 415283
What is your view on NetPromoter? Please leave your comments in the box below.