Knowledge Library

How Net Promoter Score is Like Global Warming

Customer Value Foundation

Scott Broetzmann, President of CCMC has written a brilliant piece on NPS. It is given below. For those of you using NPS, this article may make you re-think:

“Some have suggested that global warming's "murky consequences aren't vivid enough to impress our distracted brains."

And so it is with many omnibus corporate customer experience metrics like the Net Promoter Score (NPS). These oversimplified measures are all too often failing to embolden leadership to act on the impending doom and disaster that accompanies a mediocre customer experience.

Addressing the fatal flaws of an orthodox NPS approach is simple but not easy; NPS can be supplemented by the use of three corrective "measures."

The three compensatory analytical techniques include:

  • The Market Damage model
  • A proper key driver and sensitivity analysis
  • A commitment to formal action planning
The MDM effectively offsets each of the three weaknesses of an NPS-only approach. Specifically, the MDM:
  1. Identifies specific problems in each phase of the customer experience that cause damage.
  2. Facilitates the identification of the cause of problems and accountability for action.
  3. Quantifies the revenue and word of mouth damage of the overall level of problems (think temperature or CO2 increases in the global warming analogy) and of each individual problem in a manner that is credible to Finance and Marketing.
A Proper Key Driver & Sensitivity Analysis: When executed properly, key driver analysis (the methodology for identifying what matters most) is central to getting executive attention. Executives care less about “what’s important” and care more about an understanding of what can be learned by effectively acting on things that matter.

Assuming that the ultimate goal of any survey is to contribute to a positive, incremental and sustainable improvement in the customer experience, action planning is the magic elixir to bring about this outcome. It is the antidote to complacency.

As we define it, action planning is the intentional and ongoing process of identifying, operationalizing, and implementing specific actions that affect enough customers, over a long enough period of time, to increase positive ratings for those selected elements of the customer experience that yield the greatest payoff.

It would not be difficult to argue that NPS and related omnibus metrics have helped propagate a certain customer experience groupthink. The “magic” of NPS has fostered the evolution of a virtual and overly cohesive group of corporate decision makers which believes itself to be infallible or invincible when it comes to the customer experience. In many cases, nothing could be further from the truth. In such cases, it’s more likely that no one is paying attention to signs of impending customer doom because they lack the right data and processes.”

Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation.

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India
Founder editor, Journal of Creating Value
+91 98100 60368, 011-26831226
Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person's role in Creating Customer Value and getting shareholder wealth and Value.

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