Just when you thought you had this whole Net Promoter Score (NPS) thing down — it changes.
From its beginnings as a metric of customer loyalty to today’s focus as a driver of customer experience innovation, the NPS methodology is entering a new phase, with a new name: NPS2.
CMSWire caught up with Laura Brooks, co-creator of NPS, and VP of innovation and strategy at Satmetrix Systems, to give us her view on the changes that have happened with NPS throughout the years, and what companies need to pay attention to with the introduction of NPS2.
A Bit of History
According to Brooks, the primary focus of NPS during the initial research phase in 2002 was the demonstration of financial linkage to the metric.
“It captured the attention of CEO’s,” she said. “It was the first time they paid attention to some metric of customer loyalty that they got.”
She added that there was a lot of drive toward inspirational change — the belief that it was the right thing to do.
“They believed this inspired change inside their organization — a change in their culture, or just a way to make their line employees more customer-focused.”
Around 2007 - 2008, she continued, attitudes around NPS shifted, and companies began looking at it as an operational driver.
“NPS went from a high-level metric approach to a core financial KPI for companies,” she said. “It began to become ingrained in multiple levels in the organization.”
Fast forward to 2015, and now we see the move toward integration with best practices around customer experience and innovation.
“Retention is the new marketing,” said Brooks. “People are afraid they haven’t paid enough attention to it. Customer lifetime value is gelling; there are more opportunities to focus on NPS as a part of innovation.”
The Proliferation of Word of Mouth
One of the biggest reasons for the change we see in NPS today, said Brooks, was the introduction of social media. Because of this, there were huge changes between 2007 and 2015 due to word of mouth.
“A recommendation ended up being something that happened regardless of whether or not companies asked for it,” she said. “This threw a curveball for many organizations not prepared for the amplification of word of mouth.”
She added that because companies today are equal in terms of product “unless they’re a disruptor,” customer experience and the ability to retain existing customers is now becoming a differentiator.
“We see this advent of new businesses, disruption in the marketplace, and focus on a subscription-based economy. People now value having those longer-term customers.”
What’s New with NPS2?
Brooks touched on three areas in which NPS2 can bring innovation to organizations: data diversity, customer-centricity and enterprise adoption.
“Data diversity is going to be a core thing that people not only need to pay attention to, but embrace,” she said. “Taking data from across the organization — such as that collected by Zendesk or Google Analytics, for example — and understanding that these data sources can tell you a vast amount about the customer is critical.”
She added that companies should consider both structured and unstructured data.
“It’s not just a survey world,” she said. “The unstructured world has come on strong.
“Marketers have come to realize that ad spend isn’t the only thing their job is about — this is a time that their brand image is affected by multiple things. Having the data diversity lens really is vital to their understanding of what customers need and what they want.”
“One of the things that happened with NPS is that people took a black and white view of what NPS meant,” said Brooks. “‘The detractor is problematic, so let’s spend all of our resources on detractor recovery.’”
Although this view was helpful, she said, it wasn’t the end goal.
Because detractor recovery relied heavily upon the customer service function, other parts of the organization were not included and businesses were unable to see the benefit of extending customer centricity to other functions, she said.
“You can view quick wins with detractors, but sometimes that only gets you to the status quo, not delight,” she said.
Because of this, businesses began to look more at promoter development and how the promoter community could help drive innovation.
“People are focused more on what creates delight — social and disruption has propelled this,” said Brooks.
“It’s about being very journey centric and having an integrated view across the organization. The customer is not just a touch point — it’s an end-to-end journey. Customers have different personas and experience your company in different ways.”
Many functions in the organization believe that NPS doesn’t concern them, she added, but you begin to see that this is not true when you map the journey from the customer viewpoint.
Finally, Brooks discussed how we’ve gone from an era in which only a certain department could use information about the customer to finding ways to make it easy for the entire enterprise to get information and make decisions.
“In this era of mobile, social people are receiving information in a variety of ways, and companies have to present information in a very smart way,” she said. “It’s not a spreadsheet world — it’s about presenting information in a consolidated, simple way that allows people to take action.”
For this, you need smart technology, she said, which can also help with personalization — the requirement that ensures customers don’t have the “bland, boring view of the same thing.”
“As a consumer, I expect personalization,” she said. “Why shouldn’t I expect that within my business?”
Brooks noted that NPS has certainly come a long way since she worked with Satmetrix, Fred Reichheld and Bain & Company, to develop the metric way back when.
“Things have moved. These are the core beliefs we’ve learned over time — not just from our customers, but from the market,” she concluded. “I look forward to what the next cycle will bring.”
For an overview video of NPS2, visit the Satmetrix What is NPS2 page.