NPS (1) – Do you really need a customer experience measurement and improvement system?

This is the first in a series of blog posts about implementing the Net Promoter System.

The Net Promoter System®[1] is the most widely adopted system for managing customer feedback and improvement. It is used around the world and works well in all cultures and languages. Like most management systems, it has advantages and disadvantages. Its principal advantage is its simplicity. It is easy to understand and easy to communicate. Its disadvantages are two-fold: its lack of sophistication means it is tempting to find more intellectually pleasing solutions, and many implementers confuse the Net Promoter Score® and the Net Promoter System. Before going into detail on NPS®, let’s cover a few important points.

Current state of customer feedback systems on planet Earth

Like most readers, I receive requests to take surveys almost every day. Since I am interested in the topic, I fill out a lot of survey forms. I almost never hear anything from the people who sent the survey after that. What have they learned? What are they doing with my input. I took fifteen minutes to answer their questions, why can’t they take two minutes to keep me informed? Maybe they had no plans to do anything with the input other than report numbers to their management? Six months or a year later, I can observe that none of my improvement suggestions have been put into practice. I wind up feeling that my time has been wasted, and theirs too, since no action seems to have been taken.

My writing about customer experience strategy in general and the Net Promoter System in particular is about eliminating that waste, moving from survey processes to a mutual feedback and improvement process. The content of our books builds on my experience in implementing the Net Promoter System at HP, and helping others to do the same. While the system set out by Fred Reichheld and Rob Markey in The Ultimate Question 2.0[2] serves as the basis for all that follows, the system has been augmented in several ways that should speed up both implementation and results.

Do I actually need a feedback and improvement system?

Maybe you don’t absolutely need one. If you have a monopoly in your market and have government-imposed pricing, there may be nothing to gain in the short term. Why spend money if you already have all the income you can possibly get? Of course, your monopoly may not last. As well-known strategy guru Willie Pietersen told my class at Columbia Business School, “Somewhere in the world, somebody has just had an idea that will destroy your business.”

Cable TV companies discovered this to their cost when telcos started to compete with them. Most businesses are not monopolies and care about winning in their markets. They care about growth. According to Bain and Satmetrix, co-holders of the NPS service mark, NPS trends predict 20 to 60% of business growth trends, depending on the industry. Understanding how happy your customers are compared to your competitors is usually at least as important as comparing your sales coverage models and product features.

Make sure your customers are a company priority

Rather than reacting by saying “Of course we care about customers!” check your intranet, corporate annual reports, press releases and quarterly earnings statements. Do they actually mention customers? Check your CEO’s latest motivational email to all employees. Are customers mentioned in the top three priorities? Is cost reduction above customers on the priority list? Are things like “It is critical that we deliver the current quarter” at the top of the list? Checking the evidence is easy enough. It allows you to determine whether your company cares about customers from a strategic perspective. If customers are close to the top of the formal priority list in your company at the moment, get formal sponsorship for your NPS work and move ahead. More on how to get sponsorship this in another blog post. If customers are not on the list, you have some persuasion work to do first, and we will discuss how to do it.

Use operational data, not NPS, to run your company daily

All companies use operational data to ensure their processes are working as designed. The processes are in turn designed to maximize revenue, optimize cost, and respect defined service levels. Many operational metrics are delivered in real time. NPS has a time lag. Customer research and feedback needs to be used to adjust, prioritize and improve operational metrics. It is also particularly useful for the study of the relationship between cost and growth. For example, you may be able to show that pursuit of a particular cost metric has a measurable positive or negative effect on NPS, and therefore on future revenue.

In many cases, business processes that are cheap and simple are better for customers, as they may be faster and more efficient for them too. Operational data often has gaps or “white space”. This means your operational data may look good while the customer feedback may be bad. The most common example of this is the difference between the way customers measure delivery time for their orders compared to the way companies measure it. I will cover this in more detail another time. NPS should be used to supplement, correct and prioritize operational metrics, not as a substitute.

Avoid common mistakes

Customers are important to your company. Implementing a feedback system will improve their lives and your financial results. This series of articles will speed up your NPS work and will help you avoid many common implementation mistakes. You will benefit from understanding mistakes I have made and seen others make, and you will learn how they can be addressed or avoided.

Looking forward

My NPS blog series will cover the following subject areas:

• Refresher on the history and main aspects of the Net Promoter System.
• Ensuring NPS is a reliable, trusted metric.
• Feedback, learning and improvement processes — the heart of the system.
• Implementing a robust operational and analytic infrastructure.
• An employee and team environment focused on loyalty.
• Ensuring sustained leadership commitment.

Real-life examples of how to implement well and how to fail will be provided throughout the series.

 

As is often the case, the above is a slightly-edited version of a chapter in one of our books; in this case Net Promoter – Implement the System All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

[1] Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

[2] Fred Reichheld with Rob Markey: The Ultimate Question 2.0, Harvard Business Review Press, 2011, ISBN 978-1-4221-7335-0