Customer Success

6 Net Promoter Score Mistakes that Derail Customer Management Process

August 2, 2011

Is your company using a Net Promoter Score (NPS) to gauge customer satisfaction? If so, you are in the majority. According to the Temkin Group’s latest report, The State of Customer Experience Management, 2011, 48% of companies with revenues in excess of $500M utilize a Net Promoter Score. However, an estimated 21.2% of companies utilizing the metric reported that they were not satisfied. Much of this dissatisfaction around the metric is a direct result of poor implementation and/or misinterpretation of the statistic’s explanatory power.

Below is a list of common Net Promoter Score implementation and usage mistakes that can cause your company’s customer management process to derail:

  1. Using a Net Promoter Score as a stand-alone customer satisfaction metric. The Net Promoter Score is merely a tool to gauge overall customer sentiment for a product or series of products at a moment in time. It is also a great way to identify changes in customer sentiment. Unfortunately, it does not explain why customer sentiment is changing; therefore, companies must track additional metrics and customer demographic information to explain why customer sentiment changes. The easiest way to do this is to manage this information as part of the master Customer Relationship Management (CRM) database.
  2. Not monitoring the rise and fall of promoters and detractors independently. The netting of the promoter and detractor percentages can lead to changes canceling each other out and a loss of important information. For example, if a company surveyed 100 of its customers and identified 60 as promoters, 20 as neutral and 20 as detractors, it would have a net promoter score of 40, which is the same score it would have if it surveyed a new set of customers the next time around and found that 40 of its customers were promoters, 60 were neutral and 0 were detractors. These 2 measurements say very different things about customer sentiment. In the first case, the company has 20% of its customers warning against product adoption and in the second instance all customers are neutral or promoters. However, this information would not be captured by the Net Promoter Score. Thus, it is imperative that companies track the promoter and detractor scores separate from the Net Promoter Score so that all score changes are visible.
  3. The interval between Net Promoter Score surveys is too long or irregular. Customer sentiment is conditional and it can change quickly. Thus, to have an effective customer satisfaction monitoring process, your company must regularly survey its customers so that it can identify changes in customer sentiment. It must also regularly survey the causes so that it can quickly resolve problems that are leading to decreases in customer satisfaction levels. By only sampling a random stratified sample of your customers in each survey, your company will be able to increase the regularity of net promoter score surveys.
  4. Utilizing a single net promoter score across several product lines. Due to the fact that companies may have very different sentiment changes across different product lines, it is ill advised to track too many products under a single Net Promoter Score since it makes parsing out changes in customer sentiment very difficult. By tracking products or product lines under separate Net Promoter Scores, you will simplify the process of identifying where changes in customer sentiment are occurring and which customer demographics are affected.
  5. Discarding customer satisfaction monitoring processes that already work. Oft times, new adopters will discontinue voice of the customer tracking processes when they transition over to a Net Promoter Score system, even though the data that they were collecting in their previous tracking studies could be the perfect data for evaluating why customer sentiment is changing. Most of the time the legacy studies will at least be a good starting ground for the new survey your team develops to track why customer sentiment is changing.
  6. Failing to link Net Promoter Scores to the CRM database or some other database. The Net Promoter Score is only as powerful as your company’s ability to explain its changes. Customer demographic data contains a significant amount of explanatory power in customer satisfaction levels and often can be used to quickly identify which group is seeing the shift in customer satisfaction levels and why. The demographic information can also be very useful in determining the best remedy for the identified problem. Additionally, tracking the responses in your CRM database will also allow you to monitor the burdening of any one customer segment.

If implemented and used correctly, a Net Promoter Score can be a great metric to incorporate into your company’s Key Performance Indicators (KPIs), as it offers a quick high-level diagnostic of the customer sentiment around a specific product or product line. However, if misused, the Net Promoter Score can completely misdirect your company’s customer management strategy.

If you are interested in learning more about customer service and how it has changed in the social media age, you should read my blog post on why Twitter should be used as a customer service medium. Similarly, if you are interested in learning more about CRM implementation and how to develop a first class customer service model, I highly recommend reading The Best Service is No Service: How to Liberate Your Customers from Customer Service, Keep Them Happy, and Control Costs by Bill Price.

Marketing Manager, Pricing Strategy

<strong>Brandon Hickie</strong> is Marketing Manager, Pricing Strategy at <a href="">LinkedIn</a>. He previously worked at OpenView as Marketing Insights Manager. Prior to OpenView Brandon was an Associate in the competition practice at Charles River Associates where he focused on merger strategy, merger regulatory review, and antitrust litigation.