Boost NPS by addressing actual customer needs
Since its introduction in the Harvard Business Review in 2003, The Net Promoter Score is one of the key measures of the success of companies, products and services. A little refresher: NPS gives insight into customer loyalty. This is done by asking a simple question: ‘How likely is it that you recommend … to a friend or colleague?’.
Customers answering a 9 or 10 are reckoned promoters. The percentage of detractors (answering <6) is subtracted from the percentage of promoters, giving a score ranging from -100% (all detractors) to +100% (all promoters). This one question is used to judge the success of large projects and strategies, but what is really being measured?
NPS is widely used, but flawed
From different perspectives, there is much to criticize in the NPS methodology. The traditional academics challenge the one question used in NPS, arguing that other questions measure loyalty better (e.g. customer satisfaction or possibility of repeated purchase). Also, they disagree with using only one question, as a set of multiple questions often yields a more reliable result. Another issue they have with NPS, is the scale used. The 11-point scale (0 to 10) has one of the lowest predictive values when compared to a 7 or 5-point scale.
Besides the academic view, some arguments can be made from a designer’s perspective as well. Recommending anything to a friend or colleague is subject to cultural norms. Especially when combining this with a 0–10 scale, which is interpreted differently among cultures, it shapes the possibility of vastly different results for different groups.
About the predictive value of NPS:
Van Doorn, J., Leeflang, P. S., & Tijs, M. (2013). Satisfaction as a predictor of future performance: A replication.
About the 11 point scale:
Schneider, D., Berent, M., Thomas, R., & Krosnick, J. (2008, June). Measuring customer satisfaction and loyalty: improving the ‘Net-Promoter’Score.
More on NPS among cultures:
Making NPS actionable
The biggest argument against using NPS as a decisive benchmark however, is the lack of ‘why’. For customers, many different aspects of a product or service are taken into account when giving a score, which are lost afterwards. If NPS is used to benchmark performance, what happens if the scores are not as high as expected by upper management? How do business professionals deal with disappointing or declining NPS? A bland percentage does not give any pointers as to where or how to improve the proposition for your specific customer.
Given all these criticisms, it seems easy to fault NPS. But still, it is one of the most widely applied metrics in the corporate environment. Given this fact, how can both designers and business professionals improve the interpretation of the NPS? How do we deal with the lack of ‘why’? Of course, service designers would argue that an additional qualitative approach would give most insight in the ‘why’. However, it is understandable that the depth and time required for this methodology may be off putting for project managers who need quick results. So is there a middle ground?
Adding value to NPS
Finding a ‘why?’ to give more meaning and actionability to NPS would seem like a tedious process. After all, there are many different reasons for individual customers to either like or dislike a product or service. Recently however, researchers from the Harvard Business Review introduced the Value Pyramid. This model is based on the fact that everyone uses certain products or services because they offer a value which addresses different kinds of needs. The Value Pyramid consists thirty archetype values, proven to cover the entire range of customer needs. These values range from the very basic ‘Cost Reduction’ to the aspiring ‘Self Transcendence’. They are separated into four layers of a pyramid, which may remind you of Maslow’s hierarchy of needs: Functional, Emotional, Life Changing and Social Impact. Linking this model to NPS, the research showed that products and services that offer more different kinds of value are proven to have up to 20 times the number of loyal customers.
More on the Value Pyramid:
Using qualitative methods, companies can get a general idea of what consumers are valuing in their service. If a company would then ask a customer the one NPS-question, supported by the Value Pyramid as a measure for the ‘why’, it would make a vast difference. The results would give management a clear number for loyalty and performance, but also insight into what their customers are valuing in that specific product or service. Also, if the NPS is low, an indication of customer needs would provide clear pointers for improvement, making the NPS an actionable metric.
At Koos Service Design, we combined NPS and the Value Pyramid to define opportunities for the extension of the retail and hospitality portfolio at one of the largest Dutch hospitals. For each interviewee, the qualitative insights were mapped on the Value Pyramid, which resulted in a visualised palette of different needs. This combination of qualitative and quantitative approaches provided us with great insights on where to improve, but also on how to improve (e.g. a desire for more ‘fun and entertainment’ at waiting areas).
Are you using NPS as a driving measure in your business? Try asking yourself how you deal with actual user needs, and your NPS will skyrocket.