Does Net Promoter Score need a rethink?
July 17, 2017 - Openet
Telecoms service providers have long struggled to deliver customer experience (CEX) at levels as high as or higher than other industries. While most operators understand the importance of measuring customer satisfaction, few successfully do it. For years, telcos have mainly relied upon Net Promoter Score (NPS) to measure overall customer loyalty and satisfaction. However, it is more realistic to view it as an acquisition metric.
While this may have served as an adequate method of measurement for many companies, as more customer data becomes available, the ability to gather information about how customers are feeling, and identify exactly where experience pain points are located within operators’ networks and operations is proving crucial for the future telco’s CEX journey.
With the pressure on for operators to boost the way they engage with customers and improve the way they make them feel, the question is: is NPS enough?
NPS for the win?
NPS was introduced in 2003 by Frederick Reicheld as a customer loyalty metric and alternative to traditional customer satisfaction research surveys. NPS is calculated based on responses to the single question “How likely is it that you would recommend [brand] to a friend or colleague?” Responses are scored on a 0-10 scale, whereby the lowest scorers are categorised as ‘detractors’ and the highest are ‘promoters’.
Over the years NPS has come to be favoured by operators for several reasons. First, as one of the most widely known and used customer acquisition metric, operators have used it to acquire new customers. The higher the operator’s NPS, the easier it is for them to attract new customers through recommendations.
Second, operators have also come to use NPS as a tool for customer retention. By finding out which subscribers are giving low scores and solving their issues in a timely manner, operators will form a better relationship with their customers. After all, an operator capable of building a relationship based on trust is one that will be able to retain a greater number of customers.
Third, given NPS’ nature as a widely accepted metric and a single question, it is relatively easy to implement into company KPIs as it is generally understood by senior leadership and is unlikely to be received with hostility. In a legacy industry like telecoms, implementing non-disruptive methods of measurement certainly has its advantages.
Not always what it seems
But while NPS has its benefits, it also comes with several cons. Its ease of use means that operators rarely broaden their horizons to look beyond NPS towards other customer metrics. In many cases, they don’t even properly understand the NPS score itself. This has led to operators making inadequate claims about what NPS can actually measure and the insight that can be drawn from its results. For example, while a good NPS may imply that a customer is more likely to recommend a business, it doesn’t mean that a subscriber won’t churn, nor does it guarantee a renewal of contract. Unfortunately, operators often make the mistake of assuming the former will ring true of the latter.
Another NPS pitfall lies in the fact that it does not give context-specific insight and recommendations – the feedback provided by NPS metrics does not take into account an individual’s need at a certain moment in time. As a result, the NPS feedback operators receive is often very generic and unrepresentative of variables – i.e. time, location, existing relationship between operator and customer, etc. If an individual is asked to provide NPS feedback when he or she is frustrated with the operator, the NPS is likely to be reflective of this. Similarly, if an individual has just had a positive experience with the operator, this will reflect positively on their NPS. NPS will therefore never be an accurate reflection of a customer’s true feelings towards a brand beyond the moment during which the question was asked.
What’s more, NPS surveys rarely give an overall view of a telco’s customer base; they are usually answered by customers extremely satisfied with their service and therefore willing to provide positive feedback or those extremely dissatisfied and wanting to air their grievances. As a result, a middle ground rarely exists. Indeed, NPS works for service providers hoping to identify and fix issues affecting their business on a more general scale. As NPS aggregates all customer feedback to provide an average score, telcos wanting an individual view of the customer will find NPS unfit for purpose.
In a ddition to this, service providers hoping to use NPS to compare and benchmark their services against that of competitors will find this difficult. With every company using different scales, questions and settings to measure NPS, it is almost impossible to realistically and faithfully assess how well a company is performing compared to its competitors. Standardisation of benchmarking is necessary if all service providers are to use a singular metric to rate their customers’ experience and for it to be equally meaningful to industry bodies, customers, potential customers and the competition.
Read more at Telecoms.com