Is Net Promoter Score (NPS) the Best Way Forward?

NPS was introduced to us in 2003 by Fred Reichheld, Bain & Company, and Satmetrix as an outcome of researching customer satisfaction surveys. They concluded that NPS was the only question required to gauge customer satisfaction and loyalty. However after 13 years of NPS implementation, we need to take a step back and ascertain if we are asking our customers the right question, at the right time or is there a better alternative?

We’ll recap on what NPS is, the different types, limitations and also mention some alternatives like: loyalty and referral programs, monitoring social media and contextual feedback/insights.

NPS is measured by asking customers the following question:

“How likely are you to recommend this product/service to a friend or colleague?”

Based on the score, customers are segmented into either a detractor, passive or a promoter category.

NPS can be a good method to gauge customer satisfaction, however it does require supplementary information to ascertain drivers and actions. The table below briefly outlines three types of NPS: Transactional, Relationship and Competitive and their respective differences, advantages and disadvantages.

NPS only measures intent to recommend and attempts to gauge overall satisfaction with a product or service. Aside from trend changes it becomes difficult to track insights from specific product improvements or determine specific areas that need improvement. Depending on your goal, using NPS might not be right for you. So you have to ask yourself, are you asking the wrong question? The alternatives mentioned below are geared towards the measurement of specific goals and results.

Loyalty and Retention: If your goal is to measure customer loyalty and retention, then looking at your product’s usage data is a better place to determine potential churn risks. Every product has their own churn factors and warning indicators e.g. number of users logging in, number of key artifacts being created or even number of key interactions being completed. Identify these metrics for your product and keep track of them using MixPanel or Google Analytics.

Actual Referrals: Rather than measuring intent to refer (NPS), why not have your “loyal” user base refer new potential customers your way by offering a referral program. Many well known products such as Dropbox, Uber and Airbnb offer some of the best referral programs. Dropbox has one of the most famous programs that gives you additional storage space with each referral, which resulted in an insane growth of their user base by 3900% over a 15 month period.

Monitoring Social Media: Solutions such as Mention and Hootsuite allow you to monitor social media outlets, so you can always stay up to date with any active discussions about your product/service or company. In today’s world, it has become important to know how many people are actively talking about your product. Armed with this knowledge you can acquire actionable data with up-to-date information: customer sentiment, suggestions, negative opinions or recommendations. These solutions allow you to keep your eye on the ball at all times and focus on what matters.

Contextual Feedback and Insights: Skype asks a question at the end of the occasional call to get information that is useful to them regarding the quality of their service. They have stepped away from NPS where applicable and instead ask a set of questions that will help product teams improve their product/service by providing targeted data that directly measures specific attributes takes Skype’s static home-grown approach a step further and provides insights to users’ reactions on a per message basis. This can be a question posed after a key transaction, or in a static location in your product, or even an informative notice you want feedback on. We provide a flexible service that allows you to ask questions on any platform that everyone can use.

So is NPS the best measurement tool for you? We personally think that it needs to be supplemented with other alternatives to provide more accurate and precise actionable results.

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Building to help product leaders better communicate progress towards business outcomes. Product Management Leader based in Melbourne, Australia.

Building to help product leaders better communicate progress towards business outcomes. Product Management Leader based in Melbourne, Australia.