10 Ways to Incorrectly Measure Your NPS
10 Ways to Incorrectly Measure Your NPS:
Net Promoter Score (NPS) is a metric first developed in 1993 by Fred Reichheld and later adopted by Bain & Company and Satmetrix in 2003 as a way to forecast customer behavior.
NPS is perhaps the most widely used global indicator for measuring the level of customer experience when interacting with companies, as it allows for a simple and quick comparative evaluation of the emotional connection customers have with brands.
However, it is also true that, in our experience, mistakes are made in the way it is executed, interpreted, or managed, leading to inappropriate deviations that can easily lead companies to make wrong decisions.
The Net Promoter Score is based on a single question: “How likely are you to recommend the company (brand) to a family member or friend?”.
Customers are asked to rate on a scale from 0 to 10, where 0 is “Definitely would not recommend” and 10 is “Definitely would recommend”. Based on the results, customers are classified into promoters, passives, and detractors:
- Those who respond with a 9 or 10 are promoters.
- Those who assign a 7 or 8 are passives or neutrals.
- Those who give a score between 0 and 6 are detractors.
To obtain the final NPS score, the percentage of detractors is subtracted from the percentage of promoters, and the result is then multiplied by one hundred (100). The NPS index can range from as low as -100 (everyone is a detractor) to as high as 100 (everyone is a promoter).
Now we will tell you what you should not do to correctly measure your NPS:
- Consider NPS as just a metric and not as a management system. It is important to measure, but it is even more crucial to take actions based on the NPS results, understanding why certain segments, channels, or products have specific scores, and implementing improvement and innovation actions to increase scores daily. This is an essential part of becoming a customer-centric company.
- Use a scale from 0 to 9. While this adaptation is sometimes used for responses on phone keyboards, it must be done with special care to ensure equivalence with the original 0 to 10 scale.
- Use a scale from 1 to 10, which is inconsistent with the established methodology of 0 to 10.
- Recommend a specific channel or point of contact. The recommendation should be for the brand or product. For example, an error would be asking, “How likely are you to recommend the call center to a family member or friend?”
- Do not analyze the data in an “open” manner by rating. Having an NPS of 30, where 50% of customers are promoters and 20% are detractors, is different from having the same NPS of 30, where 30% are promoters and there are no detractors.
- Disregard passive customers, those who give a rating between 7 and 8. It is necessary to understand why they give these scores and find ways to improve their rating through loyalty and improvement actions.
- Bias the ratings with colors or emoticons, leading to inflated scores where the company ends up “lying to itself”.
- Do nothing with customers who provide a negative rating. When a customer rates as a detractor, it is crucial to take corrective action, contact them, and resolve the situation. This is known as “closing the loop”.
- Fail to leverage promoter customers or fans, those who rate 9 and 10. They represent potential for repeat purchases, positive word-of-mouth, and participating in product testing or other initiatives.
- Not include the possibility of having an open field or categorization of reasons explaining the “why” behind the rating.
Are you making any of these mistakes?
If you need help to measure and effectively improve your NPS, don’t hesitate to contact us through the link below; we will be delighted to hear from you.
Author: Juan Carlos Mejía
CEO of Izo Región Andina (Ecuador, Costa Rica, Colombia, and Perú).
