Some months ago I wrote about how The Killer Customer Services or Loyalty Metric does not exist. In that post I provided an example of my own experience that it is not the metric that will improve the performance of the company, but how it is applied and how it is fully embraced in the company strategy. This example was about Customer Satisfaction (CSAT).
Net Promoter Score, like Customer Satisfaction, is not a killer metric
Another metric that has been presented as a Killer Metric is Net Promoter Score (NPS). Over the past months I’ve been involved in several discussion on NPS , which I briefly touched upon at the referred post. There has been, and still is, a fierce discussion on the validity of NPS with regard to its financial performance or company growth predictive capabilities. One of the better publications, from my point of view, is this one from MIT Sloan (PDF). For a good overview of pro’s and con’s take a look here.
Personally I do not take for granted any metric, let alone a metric like NPS that has been marketed like it is the silver bullet for businesses. The Customer Experience is not something one can take lightly nor are Customers. They are both way more complex than can be captured through measurement of one question (and an open feedback-question) that aims only to capture how many Customers would be willing to promote your company or product.
Loyalty is a reward from Customers
Most businesses seem to agree that (sustainable) growth and financial performance improvement is highly linked to high Customer Retention and Customer Lifetime Value. I also believe that most businesses, researchers, consultants and (marketing) scientists agree that Customer Loyalty is related to the Customer Experience. I believe Loyalty should be regarded as a reward from Customers to the company providing a great Customer Experience.
Maybe provoked by the fierce way NPS advocates approach the discussion and defend their positions, I developed an aversion to the metric. I still believe that a more profound measurement framework that focuses on measuring Customer (desired) Outcomes and Value Co-creation, and not Customer semantics, is a more powerful toolbox.
Zappos.com and a Customer Experience that makes the difference
Nevertheless I also have to acknowledge that there are some great examples of companies that are successful and that have great Net Promoter Scores. In itself not a surprise, it is also likely that there are companies with high Net Promoter Scores and zero or very limited growth rates (I’m not aiming at the credit-crunch here). Just like there are companies with high CSAT and poor financial results. One example of the application of NPS I found has caught my attention: Zappos.com (recently sold to Amazon.com). Zappos.com is known for its great customer centric culture, wowing customer service and sustainable growth. Zappos.com is maybe The Brand Icon of how it should be done. This video (featuring Zappos.com CEO Tony Hsieh) provides some insight in how they do it:
It is not measuring NPS that relates to the success, it is the other way around
The success of a clearly defined, and well executed strategy aimed at increasing positive Word of Mouth through “wowing” Customer Experiences, can be measured through NPS. The Key-differentiator is not the measurement, it is the strategy and the alignment of companies resources, culture and true understanding of the Customer Experiences that matter, which result in high NPS scores.
Let me try and explain through a quote from Graham Hill:
There is absolutely NO POINT in measuring something if doing so doesn’t allow you to change the system through management action. These are often different measures to those typically measured by management.
As the video shows, Zappos.com understands their Customers and the Outcomes they desire. Zappos.com knows how to leverage this knowledge and understanding. They are measuring far more elements of the Customer Experience than NPS. Net Promoter Score for Zappos.com is an outcome of management action. I even think they are able to predict their next months Net Promoter Score because they know what Experiences their Customers had.
Did NPS do that for them? I doubt it. It is their focused and well executed strategy in combination with a balanced measurement framework.