In a world with Amazon, Netflix, and Uber, the Net Promoter Score is dead.
When I was younger, I looked forward to my weekend family visits to Blockbuster to pick out a movie rental. In 2005, as a freshman at Berkeley, I discovered Redbox in our dorm hall and immediately knew family trips to Blockbuster were about to become obsolete. I was okay with this.
The convenience of being able to walk downstairs in my dorm hall and rent a DVD from a kiosk at any hour of the night seemed to be worth the family time I was giving up. What I definitely didn’t see coming was Netflix.
Netflix started off a step above Redbox — — it gave me access to older movies (which Redbox didn’t have at that time), I could keep it for as long as I wanted, and I didn’t have to wait in line because Netflix mailed the DVD directly to my house. By this time, I was a busy young professional so I really appreciated Netflix’s flexibility and convenience.
Then, Netflix slowly began offering streaming movies online. With a few clicks, I now had access to hundreds of movies, both old and new, at my fingertips. This innovation revolutionized my at-home movie watching experience. Not only was this new Netflix service more convenient, it was cheaper too.
I’m sure at some point during this time Blockbuster realized that 24/7 kiosk movie rentals would be a great business direction, but by then, it was far too late. I’d also bet that Redbox had some early indication that delivering movies directly to consumers at home was a better business move, but it would have been difficult to change course given the amount of hardware they have. However, the biggest mistake Redbox and Blockbuster made was actually quite simple and completely avoidable. Redbox and Blockbuster failed to collect good customer feedback data, and in the process, didn’t really understand their customers’ behavior.
THE RISE OF NETFLIX
If Blockbuster and Redbox had collected good feedback data, they would have known that the real opportunity is people want to stay home. People don’t like long lines. They don’t like getting to a kiosk or a rental store and finding out that the movie they want is out of stock. Netflix’s DVD mail order service proves this. People were willing to wait a few days for the DVD to arrive in their mail rather than go to a physical location. Redbox and Blockbuster missed these gaps and opportunities because they likely didn’t pay much attention to the WHY behind a customer’s behavior or decision. Netflix, on the other hand, was paying attention.
Netflix recognized that people want to stay home. Their DVD mail service was dependent on people staying home. When networking infrastructure improved and gave people faster internet connectivity at much cheaper prices, Netflix recognized this as another opportunity to keep people home. They turned on online streaming and began heavily investing in their online movie library, versus their DVD business. Netflix had good data to indicate that this was a better direction for the company. By creating a far more superior service, Netflix created legions of loyal customers that continue to this day.
THE BEGINNING OF THE END TO NPS
Since 2003, the Net Promoter Score has helped businesses measure customer loyalty and satisfaction through one simple question — how likely it is that you would recommend Company X to a friend or colleague? That used to be enough. As the world rapidly changes and the marketplace becomes more competitive, your business benchmarks and customer feedback programs need to change with it. People today are not like people 14 years ago when the NPS was first introduced to the business world. Understanding the WHY behind a customer’s attitude and behavior towards your company is much more important than understanding how loyal or satisfied a customer is. Superior products and services, like Netflix, that are cheaper, convenient, efficient, and have better user experiences intrinsically create customer loyalty and satisfaction.
Consider Amazon for a second. Today, Amazon is known as the world’s largest internet-based retailer, selling everything from electronics, to toys, and even cloud computing services. With it’s recent announcement of it’s acquisition of Whole Foods, it may be hard to remember that Amazon actually started off as an online bookstore. How could something so simple like an online bookstore grow into a tech behemoth? That’s easy — -good data.
Amazon, like Netflix, had enough good data to know when to begin developing and offering different types of products and services. They didn’t focus on just ensuring existing customers are happy and loyal. They took advantage of every gap and opportunity they saw in the marketplace, and brought in new customers by offering an increasingly valuable service. Whereas Netflix recognized that people want to stay home, Amazon understood that people want to save time. From helping people save time reading books (Kindle), grocery shopping (Amazon Fresh), to completing tasks (Alexa), every service or product that Amazon develops is focused around saving people time.
WHY NPS WON’T HELP YOU IN A TECH-SAAVY WORLD
Netflix and Amazon highlight the real problem with the Net Promoter Score: it’s situation-focused. It is monitoring very specific business objectives. Most current customer satisfaction strategies and surveys are designed this way. They collect feedback about a specific point in time (i.e. a customer’s recent experience) and ask questions based on what the company wants to hear. As a result, the feedback you receive fit neatly into a box of what you know you want to learn and line up with your company’s pre-determined metrics. If you’re only collecting data about what you know you want to hear and measure, you miss all of the gaps and opportunities in your customers experience you don’t know exist. You miss the ability to truly understand why and how your customers’ think and behave.
Another important factor to consider is the demographic. There are 92 million millennials in the US, versus 61 million Generation X and 77 million baby boomers. Millennials are said to be the most educated generation in Western history. They are technologically savvy, will make up 50% of the workforce in the next few years, have the biggest purchasing power, and most importantly, are entrepreneurial. Entrepreneurial people appreciate convenience, value, and efficiency in a business over anything else. This makes it hard to be truly loyal to one company, regardless of how satisfactory their service is.
For example, I prefer Lyft over Uber. The fares are cheaper, my drivers seem friendlier, and I can tip drivers that go over and beyond what’s expected. My satisfaction with Lyft is high and I do recommend the car service to friends and colleagues. I can write an entire book about all of the things I don’t like about Uber and it’s business practices, but it doesn’t change the fact that Uber, like Netflix and Amazon, understand me as a modern consumer very well. They collect good data. For Uber, the real opportunity is people do not like driving. UberEats, the company’s food delivery service, is an extension of this strategy. Uber simply looked at their customer data and identified all of the other ways they could help people who don’t like driving, parking, buying gas, and waiting.
As happy as I am with Lyft, I know I can count on Uber in a city where there aren’t any Lyft drivers. If my Lyft driver is too far away, I immediately cancel, and request an Uber. I use UberEats 5 days a week. Lyft’s customer satisfaction survey asks me to rate their drivers and the ride. What they really should be asking me is why I often choose to use Uber in the same city Lyft is available. That feedback would tell them I don’t like waiting longer than 5 minutes for a ride, and Uber tends to be more reliable in situations where I really can’t wait longer than 5 minutes. The development strategy from that feedback would be to improve their logistics to ensure that all riders can be picked up in 5 minutes.
VOICE OF THE CUSTOMER
In today’s business environment, any customer feedback strategy that only focuses on key performance indicators or tracks situational success metrics is backwards looking and outdated. A feedback system that is solely focused on measuring against past benchmarks is not only inefficient, but a terrible use of your customer’s limited time. See my Lyft example above. The Net Promoter Score, by itself, is irrelevant in a marketplace where superior products and valuable services are everywhere. If you want to remain competitive, your feedback data should make you smarter and help you actively improve your products and services. To stay relevant, you need to understand WHY your best and worst customers’ behave a certain way. You need large volumes of customer experience data.
Customer experience data is best collected through a Voice of the Customer platform. An effective Voice of the Customer platform is characterized in several different ways. It is:
1. Always on. This means customers can provide you feedback regardless of whether or not they made a purchase from you. The survey is ongoing.
2. Consisting of fluid objectives. While there are specific objectives that you may want to learn about, you should be able to uncover other objectives you didn’t anticipate.
3. Flexible enough to allow customers to tell you what they want to tell you, versus what you want to hear, which creates a range of high-level insights.
Ultimately, a Voice of the Customer platform allows you to focus on gaps and opportunities within your business and industry so that you don’t get Blockbuster-ed.
Natasia Malaihollo is the CEO and Co-Founder of Wyzerr, an artificial intelligence company that turns feedback data into actionable insights and tasks for a business. Learn more at Wyzerr.com.