Should you still be using NPS?
A lot of companies use NPS to track customer loyalty. But an NPS score often doesn’t correlate to churn rates or future sales. So what can you do?
Fred Reichheld, Bain & Co. and Satmetrix introduced the Net Promoter System in 2003. Marketing and customer experience teams have used it to predict business growth ever since.
But we’re starting to hear that NPS scores aren’t always reliable.
Influential researchers like Daniel Schneider and Timothy L. Keiningham have also written papers questioning whether it really is ‘the one number you need to grow’.
Our recent experience with a multi-national gym chain bore this out. Their gyms with their highest NPS scores also had their highest churn rates.
So what can you do?
It may sound obvious, but if you ask limiting questions, you limit what customers can tell you. But if you give them space, they’ll tell you what’s personally important to them.
The brand’s investment had been in renewing (and promoting) the weight machines and classes at certain gyms. And most of the questions in their twice-yearly survey of customers were about these subjects.
Can you guess what happened next?
When members came to score their gym, they assumed that the best reason to recommend a club was on the basis of the machines and classes, since that’s what they’d been told was important.
But high NPS scores didn’t correlate to the churn rates.
Fortunately the customer experience team had also asked a couple of open-ended questions. They asked us to use text analytics and some linguistics to see if we could find what was really driving the poor rate of renewals.
Text analytics quickly showed that the ‘welcome’ was the most important factor in customer retention.
So far, so good.
But what makes a good welcome? Is it just ‘hi’?
We used linguistics to divide the customers’ reports of ‘welcoming’ into different themes and discovered that the most effective ‘welcoming’ is where the staff member on front desk is unreserved in their greeting: members shouldn’t have to prove they’re members before they’re welcomed in.
Armed with these insights, we were able to recommend some simple changes around how to train front desk staff, and we suggested that new gym designs looked at the relative position of the turnstile and the front desk staff.
NPS is a valid score provided it’s not your only decision making tool. It can mislead you, or it can point you in the right direction. But it’s only a sign.
Discovering the true root cause of a behaviour depends on understanding the customer’s perception.
If you want to see a more detailed picture than traditional NPS shows you, just add a little linguistics and text analytics.
We like to listen. We like to talk. If you’d like to hear more, please email Chris.