Does the Net Promoter Score system actually help you and your business? Take a look at the pros and cons of this the NPS system and decide for yourself.
Before we begin, it is important to note that the NPS system is not a complete metric system, nor can it be claimed as a perfect metric. It is a metric to gauge customer loyalty and can also be utilized as a system to improve your customer loyalty over a period of time.
What is the Net Promoter Score?
Developed in 2003, the NPS was created so that businesses could garner a better understanding of their customers. The NPS was made by Bain & Co., a management consulting firm.
How is the Net Promoter Score Calculated?
Questions are asked and the answers are given on a scale of 1 – 10. Answers in the 0 – 6 range are determined as detractors, answers in the 9 – 10 are determined as promoters and then the 7 -8 answer range are passives.
To calculate the NPS score, the percentage of detractors (those who answered in the 0 – 6 range) are subtracted from the promoters percentage. The NPS score can range from -100 to 100, and this will depend on the amount of detractors and promoters. Obviously, the goal is to achieve a higher amount of promoters.
There are various strengths and weaknesses of net promoter score. Consider the following…
NPS: the pros
1. The NPS is a well recognised system across C-suite executives and other organizations because it is simple, concise and easy to use and understand
2. Can be utilized as a benchmark to understand your customer base and to organize your customers
3. The NPS can provide a user-friendly experience because your customers simply need to answer one close ended questions. This close ended question can then be followed with an open ended question to explain the prior answer.
NPS: the cons
1. The findings from the questions are often presented with restricted insight
2. If you do not have a workable plan to use the statistics, an NPS is not helpful. You’ll need an action plan to use the statistics with the help of promoters and other tools
3. An NPS score does not provide a relatable focus on customer experience. So, if you rely solely on an NPS score than you may find something in your business lacking.
Remember, an NPS score can be a helpful tool but the simplicity of the system can be both helpful and also detrimental if you are not careful. Because the NPS relies on the results of just one question, your business could be missing out on other valuable information.
In order to leverage the benefits of the Net Promoter Score, it is essential that you have an understanding of the restrictions the NPS system brings to the table. Now that you are aware of the potential cons of the NPS, you will see that they are only disadvantages if you rely solely on the NPS and you can efficiently use it to improve your customer experience, loyalty and customer satisfaction.
