Is NPS a Useful Metric?

February 20, 2019 Elizabeth MacAulay-Italiano

This article was originally published on WnTD's blog. With Elizabeth's permission, we are republishing and sharing it with our community. 

In a recent post, we talked about Customer Success Metrics, one of which was the Net Promoter Score (NPS). There is some debate on whether NPS is a useful metric or not. I’ve been part of some really healthy debates on this topic and I think it’s a very important one so I decided to make it the topic of our next blog post. My thoughts – the answer can be both yes and no. This may not seem like a decisive answer but read on and you’ll see that it is and why. 

First, let’s go back to basics on what NPS is. It’s a scoring system that typically asks your customers whether they would recommend ‘ABC Product’ to a friend. This is a signal of loyalty and if they would refer friends and colleagues to use your product. It’s an indicator as to whether your customers are satisfied. This is a good thing to know. Where some of the debate comes in is whether it’s useful for decision making and helping to solve problems or whether it’s a vanity metric.

Knowing your NPS score is good information but the score in and of itself is not very useful (there’s the no part of my answer). However, when NPS can have a real impact is when you understand the data beneath the score. Once you start peeling away the layers of data beneath the overall score the better position you will be in to make data-driven decisions. If you put an NPS framework together that allows you to uncover the layers of useful data then I am a huge yes to it being useful. 

Let’s talk about what you need to do in order to pull more data from underneath the overall score so it can have a meaningful impact. 

There are three main problems you need to solve for when putting together your NPS framework:

  1. How are you going to survey your customers? Meaning how you are going to send the survey. 
  2. How many customers are going to be surveyed and how often? Ensuring you have a critical mass and a relevant sample size in your survey is very important.
  3. How are you going to collect and analyze your responses and turn it into actionable and meaningful data?

Let’s break these down a bit further.

Survey Methodology

What method you choose to survey your customers depends on your customer type and your business. Carefully consider how you will survey your customers as you want to ensure you choose a method that will get the most amount of customers seeing your survey as possible. Ask yourself where your customers are most likely to be engaged. This increases your odds of a higher response rate.

Also, think about what follow up question you want to ask your customers. This will become a rich data source. Create a plan for how your team will engage with customers that respond afterward as well. This will help you uncover the reason behind the score they gave and provide you with deep insights into what your customers are thinking and feeling. When captured and organized effectively you’ll be able to identify trends and areas to improve on. 

How Many Customers and How Often?

It’s important to survey all customers so the question on how many customers will be surveyed isn’t a suggestion that you don’t attempt to survey all customers, it’s more a question of how many customers you can reach with your chosen survey method(s). For example, if you are missing contact information for some customers then you won’t be able to survey 100% of your customers via email. Be realistic on how many customers you can reach through your survey method to ensure you have a relevant sample size. 

The cadence is also important to decide on. If your organization does not implement a set cadence that is consistent across your customer base then the data will have a variable which will make it more difficult (if not impossible) to draw conclusions on. This type of variable will make it much harder to spot trends within the customer lifecycle. 

How Will You Collect and Organize Data?

Data is only useful if you can collect it and organize it in a way that allows it to tell a story and that lets you spot trends. Having a process in place for organizing and structuring your data is what enables you to start peeling back the layers of useful information that lay beneath the score. You can slice it and dice it and understand the drivers of not just your promoters and detractors, but also the drivers of churn and your customer health score.

So in short, NPS on its own is good to know but not useful for decision making that’s going to have an impact. However, done correctly, NPS and the data that comes along with it can guide your organization through decisions on product, marketing, sales, customer success, strategy and operations that will positively impact your organization. This data can provide the decision-making ability that’s rewarded by a healthy bottom line.

Not sure where to start with your NPS strategy and execution? Get in touch with us. We can help.

 

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About the Author

Elizabeth MacAulay-Italiano

Elizabeth MacAulay-Italiano is the Managing Director and Founder of WnTD Partners. Her experience includes over a decade in the tech industry and nine years of experience in Customer Success. WnTD is a consultancy that helps organizations scale their customer success strategies and operations.

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