Why so many organisations keep getting NPS wrong
- 07 December, 2017 13:17
Brian Andrews likes to joke that he is the Forrest Gump of the Net Promoter Score movement, always turning up at seminal moments in its development.
From his former role as vice-president of customer experience and business excellence at Intuit – the first large company to adopt NPS back in 2003 – through to his current role as senior CX principal at customer experience management specialist, Medallia, tracking and improving customer sentiment has been a common thread in his working life.
Over that time, he has seen many instances of NPS being employed well – and more than a few when it’s not. And that difference can come down to a simple misunderstanding of what NPS actually is.
“You have to be able to tie it to actually customer behaviours,” Andrews says. “So how does a detractor churn differently to a promoter or a passive? A lot of companies bypass any kind of economic analysis associated with NPS, and therefore it is on very shaky ground.”
Andrews contends one of the key players in a successful NPS rollout comes from an unlikely place within the organisation – finance.
“Once you make that strong connection between the customer’s intent and their likelihood to recommend, and seeing the financial connections, it becomes a lot more powerful,” he says.
“With companies that have just launched it as a metric, but have no idea what the economic benefit is, or the lag between intent to recommend and actually showing up in increased sales, it becomes an empty philosophy versus a pragmatic way to grow the business.”
One of Andrews’ roles before joining Medallia was as vice-president of customer experience and NPS at giant US telecommunications company, Sprint. Back then, he says Sprint was spending US$1 billion on advertising, despite it having the greatest number of detractors of any of its three main competitors.
“If you’ve got a big detractor base, the billion dollars that you are using to try to convince people to buy your product faces a huge headwind,” Andrews says. “The fewer detractors you have, the more effective your marketing dollars become in terms of reinforcing the brand.”
Andrews concedes, however, that getting the attention of the CFO is not always easy, despite customer sentiment being one of the few available leading indicators.
“I think it’s a fundamental problem with finance, because customers don’t show up the balance sheet,” he says. “They don’t show up anywhere.
“NPS is really a forward-looking metric. A lot of the financial metrics are about how you did in the past.”
Andrews believes organisations that derive the most value from NPS are the ones that view it as a means of not just measuring experience, but use it as a tool for driving great experience. Indeed, he says the measurement component is something organisations should even be able to figure out for themselves, without needing to ask their customers.
“That is where the future of the customer experience space is going to be, in predictive analytics,” Andrews says.
That same idea is now one of the key focus areas for Medallia.
“We are investing a lot in machine learning,” Andrews says. “There is so much information that companies have about their customers, that they should be able to predict, based on that information, with a high degree of confidence whether that customer is a promoter, a passive, or a detractor.”
Medallia is working to mesh operational data with customer profile and experience data, with the goal of getting better at helping companies drive action.
“That is really what makes us different from some of our competitors,” Andrews says. “Some started with a mindset of how of ‘we make research easier?’. We started with ‘how do we make operations better?’.”
Andrews joined Medallia in October 2016, having been a customer several times already. While the company’s roots were in hospitality, it has since expanded into airlines, financial institutions, telecommunications, retailers, and restaurants.
One of the big growth areas for Medallia has been in B2B organisations –a group not traditionally associated with NPS scoring.
“B2B customers are starting to figure out if they lose a couple of their big clients because they thought their relationship was good, and then they lose them, it can impact their ongoing revenue streams,” Andrews says. “So in the US, we are getting a lot of B2B companies looking to get that feedback, and looking for us as the platform to help them do that.”