How to use NPS to improve customer experience
When it comes to measuring customer advocacy, most organizations turn to net promoter score (NPS) as a means to measure it. However, customer advocacy is not synonymous with customer experience (CX)—though it is a piece of the puzzle. In this post, we’re going to uncover how NPS and customer experience are related and how they work together to help companies create brands customers love.
What is NPS?
Net Promoter Score, or NPS, is a common customer experience metric that companies use to gauge customer advocacy. The metric came about after decades of research by consulting, marketing, and management firms, that determined there was a formula that could express customer advocacy.
Since then, several books and a lot of customer interaction later, Fred Reichheld, Bain & Company, and Satmetrix zeroed in on the “One Number You Need to Grow” and published their findings in the Harvard Business Review. Thus, NPS was born.
In short, the calculation aims to measure customer sentiment—and in many ways, advocacy—by asking just one simple question.
The NPS survey question
After years of research and experimentation, Reichheld and team landed on one essential question to gauge customer advocacy, which has since become the industry standard Net Promoter Score question:
On a scale of 0 to 10, how likely are you to recommend this company’s product or service to a friend or a colleague?
The team tracked the purchase histories of more than 4,000 consumers and compared them with instances in which consumers then referred the company they purchased from to someone else.
Reichheld was initially surprised that this NPS question turned out to be the most accurate indicator of customer advocacy. It was intriguing to him because he initially assumed that a question related to how much consumers felt a brand deserved their loyalty would be the most accurate indicator. However, the team soon realized that the concept of loyalty wasn’t nearly as telling as the act of advocacy—whereby someone recommends a company to someone else.
How to calculate NPS
The NPS formula is straightforward. After being presented with the question above, respondents choose a score, typically between 0 and 10, with 0 meaning they’re 'not at all likely' to recommend the company/product/service and 10 meaning they’re 'extremely likely' to recommend the company/product/service.
Once all the responses are gathered, they’re grouped into three categories:
- NPS Detractor: Scores 0-6
- NPS Passive: Scores 7-8
- NPS Promoter: Scores 9-10
Then, the percentage of Detractors is subtracted from the percentage of Promoters to find the NPS. Scores can range between -100 and 100, with scores of zero and above considered good. (Passive scores are excluded from the calculation as they aren’t considered to either help or harm.)
What is considered to be a good NPS?
As mentioned earlier, NPS can range from -100 (all scores 0) to 100 (all scores 10). A score of -100 isn’t remarkable and means that such a company has a lot of work to do to improve its CX. On the flip side, a good score doesn’t need to be 100. In fact, no company has ever achieved a score of 100. However some brands, like Starbucks and Costco, consistently come in with high net promoter scores (above 70).
Generally, most companies consider any score of 0 or higher positive. Nonetheless, what constitutes a “good” score can vary by industry. For example, the industry average for Consumer Brands and Fast Food is 40, but the industry average for Telecommunications/ Cable/TV service is -5. The disparity in benchmarks across industries is great, so it’s important you consider that when you discern if your NPS is good or bad.
NPS as standalone data has its disadvantages
While NPS can tell you who’s a self-proclaimed advocate for your brand, it’s no guarantee that your customer experience is top-notch.
Imagine that a company sent out an NPS survey immediately following a customer’s purchase. The purchase experience was good, so the customer gave the company a high score. But, a few days later, when the customer received the product it wasn’t what they ordered. But the return process was the polar opposite of the checkout process. The customer is now frustrated, upset, and has vowed to never make another purchase. If another NPS survey were sent out at this time, chances are this customer would be a vocal detractor.
NPS captures just one point in time with a customer, and the customer’s response will depend heavily on their most recent experience. Focusing solely on NPS as a measure of overall CX is a dangerous habit that could eventually turn loyal promoters into detractors.
What users say isn’t necessarily what they do
Self-reported data is notoriously inaccurate, which means just because your customers say they’d recommend you, that doesn’t mean they will. Jacob Nielsen reports that his research shows self-reported data from users tends to be heavily influenced by cognitive biases. For example, a participant in a user research study may claim that they drink their coffee strong and black. But when observed in their natural environment, researchers find they take cream and sugar.
The same logic can be applied to NPS results. A favorable score from a customer does not guarantee that the same customer will recommend your business to a friend.
NPS doesn’t show you the why behind your score
Probably the most important piece of information NPS misses is the why behind your score. If your company recently received a high NPS, do you know why? And if the score isn’t so great, how can you tell what needs improvement?
While some NPS surveys do provide follow-up questions that enable customers to explain why they chose a particular score, that feedback relies solely on the customer’s memory of their interaction with a brand. And that recollection may not be accurate or detailed enough to inform any actionable response.
How frequent user research can complement NPS and improve CX
Like most quantitative metrics, NPS is a strong signifier of a companies’ strength in CX, but it should be paired with qualitative insights to bring the necessary context behind the score. In order to do this, many companies use their NPS to identify areas that need improvements then collect customer insights through qualitative research like usability studies to get a better understanding of why they scored the way they did.
By hearing your customers explain why they scored your business the way that they did, it’s much easier to adapt and meet their expectations in the future.
Think of NPS as you would a survey or an A/B test. While it can guide you on what your customers are doing, you have limited ways of knowing why unless you conduct user research. If you have a great NPS, for example, conduct qualitative research that digs deeper to find out what your customers really love about your brand or service, and why. Watch them navigate your site or app and speak in their own words to develop an intuitive gut-level understanding of what’s really motivating that score.
You may discover that although your NPS is high, nearly every customer was having the same issue with your navigation, or that the copy on your pricing page doesn’t clearly explain what’s included in the price. On the other hand, you may realize something is really special about their experience interacting with your company that you can replicate somewhere else.
Observing what your customers say when they’re interacting with your brand puts the muscle you need behind your NPS to understand its meaning and make it immediately actionable. Once you’ve established a regular research schedule, you can combine your NPS survey results with corresponding qualitative research and begin to benchmark your progress.
Keeping customers happy enough to continue coming back and recommending your brand is a perpetual process that involves your entire organization. Everyone from your sales team to customer service to the executive suite needs to be committed to building a people-centric company culture.
How Experian leveraged user research to support NPS
Here’s the situation. Experian researchers could obtain NPS feedback from power users in a fairly straightforward manner, but they couldn’t efficiently connect with—or elicit valuable, unfiltered insight directly from them. As a result, a massive portion of Experian’s user base was excluded from consideration when critical messaging and design decisions were made.
To combat this problem, Experian researchers leveraged user research to remotely speak with those power users and end-users. By starting with NPS data about end-user preferences, they were easily able to identify the enhancements that were necessary for the company’s products and services. However, they didn’t understand what exactly needed to be changed, and why.
The actionable qualitative human insights obtained directly from end-users helped the product team easily pivot and prioritize their sprints on work that delivered faster, more impactful results. Since starting on this journey of user research paired with NPS, they’ve realized a +20% process improvement for customers.
UserTesting is a more strategic approach than NPS alone and delivers deeper insight into why our users rate us the way they do. -Sr. Manager of UX Product Design, Experian
Customer experience is a moving target
You don’t want to miss the mark when it comes to understanding exactly how NPS is impacting your CX. Combining your NPS strategy with frequent qualitative research will help you zero in on what your customers really think—and how to make your products consistently exceed their expectations.
Learn how to make customer feedback the cornerstone for building great experiences.