Leadership and NPS

BLOG: What can Leaders learn from NPS – The Net Promoter Score?

Kathy Stiff, Owner, Supporting Customer Care Ltd


December 21, 2021

The holy grail of customer loyalty has vexed many an organization for many a year.  Knowing that keeping loyal customers costs the business less than it does to replace them with new customers can focus leadership energy.  Yet many spend too much time spent chasing the concept of satisfaction without actually thinking of customer experience.  In fact, a whole industry has sprung up around customer loyalty – what is it? what drives it? how can we achieve it? and how can we measure it?

 

One method of understanding loyalty is NPS – the Net Promoter Score. Well used in many arenas, I love this approach. It’s a great way to begin understanding how much loyalty your customers feel towards your organization.  And it can be used across a range of companies selling both products and services.

 

Put simply, the NPS asks a simple question to establish how likely you are to recommend an organization to your friends and family.  It’s based on referrals because this pre-supposes that two important conditions have already been met – that the product or service is of superior value and that the customer feels good about it.  After all, if you are willing to put your own reputation on the line to recommend something to those you love, it must be pretty good!

 

The fundamental premise of NPS is that your customers can be divided into three categories – Promoters, Passives, and Detractors.  Promoters are loyal enthusiasts who keep buying from you and urge those they know to do the same.  Passives are satisfied but unenthusiastic customers who will move to your competition without a second thought.  Detractors are unhappy customers who may feel tied into a relationship with your company that they perceive to be bad or disadvantageous.

 

When asked the question “How likely are you to recommend us to friends and family?”, those who give a score of 9 or 10 are seen as Promoters and those who score either 8 or 7 are labeled Passives while those who rate you 6 or fewer are known as Detractors.  The NPS is then established by calculating the percentage of promoters minus the percentage of detractors.

 

There are many benefits to using the NPS, not least of which is hearing the voice of the customer.  It also offers potential for benchmarking against future performance and across industries.  At the same time, the scale of 0 to 10 is easily understood by customers, and asking the question over a sustained period has shown that the terms Promoters, Passives, and Detractors accurately predict customer behavior.  The aim of NPS internally is simply to increase Promoters and decrease Detractors, shown straightforwardly in the NPS score.

 

One of the biggest downsides of asking what Fred Reicheld called “The Ultimate Question” is that while NPS is often sold as a relationship-based measurement tool, asking the question then doing nothing actively damages your relationship with your customer.  Not focusing on the detractors can be soul-destroying for your people because the things that generate that level of response are not being fixed.  Your people either then have to go to more effort to create workarounds (if they care enough) OR they will generate more detractors by not putting the extra effort in (if they don’t care!)

 

Another downside of using NPS is that many organizations ask the question when it’s not appropriate.  Where people don’t see themselves as customers buying a service or product, either because no money changes hands or because they feel they’ve already paid for the service through taxes, asking the question devalues it.  For example, when the NHS asks patients “How likely are you to recommend us to friends and family?” it can cause frustration.  Patients may not have the concept of customer satisfaction uppermost in their minds when they are admitted to the hospital and it’s even lower on their list of priorities when they are discharged.

 

So what can we learn from NPS?

 

It’s easy to get bogged down in the questioning process, and then compare (or not) your results with other organizations.  What really matters is what you do with the information NPS has provided.  That means organizations must ask the follow-up question if they intend to do anything with the scores NPS provides.  And by follow-up question, I simply mean “what one thing led you to give this score?”

 

It’s also easy to get bogged down in the way technology can help you measure stuff without actually thinking about what you then do with that data.  The process of seeking customer feedback is devalued when you do nothing with that feedback or, worse still, do something and don’t tell those who’ve given the feedback.

 

When customers perceive they have no real choice in using your service, it devalues the question and makes them wonder why you’re asking.  A degree of cynicism then permeates the interaction with customers remembering that feeling over all others.

 

Customers are fed up being asked the question!  It can be easier to do the “push button” (they are everywhere at airports) because it’s quick, easy, and instant.  Which is cheaper for those companies who wouldn’t do anything with the responses here or from NPS.  And there’s no expectation from the customer that anything will happen – they see it as a simple “how do you feel now?”

 

Because it’s simple, CEOs and other senior figures like NPS.  Sadly, they often don’t want to invest in whatever the follow-up question shows needs to be changed or improved.  And they often don’t want to invest in measuring whether it actually does generate loyalty.  Wouldn’t it be great to know –  Who purchases more? How much more do they purchase? How long does the repurchase/reuse intention last?

 

 

Success in business is all about reducing costs. But when headcounts are cut and less is spent, the outcome is often that customer-facing people don’t feel they have the time to engage with their customers.  In short, the system isn’t set up to allow those on the front line the time to act in ways that would create more promoters and fewer detractors.  Yet the way the customer feels is the most meaningful measure of customer satisfaction because what people remember for a long time (and go on to share with others) are the emotions evoked in them when they interact with you.

 

In these current times, the NHS is uppermost in many of our minds.  The challenges faced by those supporting patients through Covid 19 are unimaginable to most of us.  Yet the stories of humanity and empathy are many and moving.  NHS staff have taken opportunities to engage with patients (and their family and friends) and create connections in these horrendous times, despite the challenges of PPE and other unimaginable restrictions.

 

Before Covid 19, my perception of the NHS was that it resisted change and new ways of working.  Both physical and emotional barriers existed that made things more difficult for patients who then had to rely on themselves (or their friends and family) to put in the effort needed to resolve their own issues.  Many patient requests were functional – wanting simple answers to simple questions, getting a drink of water on a hot day, finding out from the consultant their prognosis for the future, knowing when they were likely to be discharged, providing information to friends and family.  These were (and indeed are) just a few of the touchpoints for users of the NHS.  And more often than not NPS scores were terrible, primarily because the two important conditions – that the product or service was of superior value and that the customer felt good about it – hadn’t already been met

 

Now, my perception has been turned on its head – the NHS has proven itself to be a truly remarkable institution.  Imagine asking those who’ve survived Covid 19 “how likely are you to recommend us to friends and family?’ Imagine, too, asking those who’ve lost a loved one but been touched by the empathy and connection NHS staff have demonstrated in their time of need? The NPS scores would probably go through the roof.

 

Once we’re through Covid 19, the biggest challenge for leaders of the NHS will be how it can make the most of the very hard lessons it has learned, how it can focus not only be on controls and processes, but also on empathy and connections.  After all, customer service in the NHS is about being engaging and being engaged. Asking the Ultimate Question AND the follow-up question would allow leaders to truly take the lead and show what they are made of – which is where leadership really matters.

 

Find out more about Kathy.

 

Interested in Leadership development?

Share: