By David M. Schneer, Ph.D./CEO
Net Promoter Score (NPS) is a widely adopted indicator of relative brand health, which is tracked over time to provide longitudinal directionality and often compared to competitors’ scores. The corporate world’s love affair with NPS is as simple as the metric itself. There is a clear desire to leverage a single, simple-to-identify number to judge a brand’s performance over time. And from a research perspective, the respondent only has to answer one question. Who doesn’t have time for that?
But just because it is popular, easy to use, and fast doesn’t mean NPS is the best metric for your brand. A few serious concerns to consider:
- It is a fact that human beings are biased in the ways they use numeric scales. Whether it is cultural (biased against or toward specific numbers or extremes), personal (“I never score anything higher than an 8.”), or otherwise, it is unavoidable.
- NPS gives no context for why your score is what it is. Perhaps your NPS score went down 3 points this quarter. Why? Who knows, but for sure there are precious hours being spent in meetings by highly paid corporate employees debating possible explanations for the decline.
- Some users of NPS have no understanding of where their data come from or how they are collected. I have lost count of the number of times I have been asked by a sales associate to please complete the survey at the bottom of the receipt, and to be sure to rate them at least a 9 out of 10 so the score is not leveraged against them by their management chain. You cannot fault a sales associate for making such a request, as their performance evaluations, pay increases, and quality of work life often depend on high scores. This is a system created (or at a minimum, endorsed) at the top of the corporate management chain, whether the end consequence was intended or not. It is fundamentally flawed, unethical, and should be abandoned immediately. Obviously not all NPS data are collected this way, but if this isn’t a red flag, I don’t know what is.
So, if not NPS, what else is there? What you need is an index—a methodologically sound alternative to NPS that will both provide you that single metric number that your management teams crave AND provide context as to what is contributing to any changes.
Not too long ago, I managed Global Customer Insights at a huge technology company. Over time, we were able to wean internal organizations off NPS, and onto a new metric we called Brand Health Index (BHI). BHI scratched all the itches. It provided a single metric which internal organizations could use as a performance indicator, and it also provided direction to internal teams for what to do about it. Because we also tracked our competitors, we preserved relativity metrics, which told us whether ups and downs were contained within a single brand or spread across the whole industry.
The hardest part of defining a new index is deciding what individual metrics to feed into it, and what weight to allocate to each one. Some metric inputs could include past XX-month purchases, likelihood to consider, likelihood to recommend, likelihood to repurchase, etc. Yes, NPS requires only one survey question. But an index doesn’t require that much more respondent effort (perhaps an additional minute of survey time) AND it yields direction for internal teams on what to do about the results. What would you find more useful? A) Our NPS score went down 3 points this quarter, or B) Our index went down 3 points this quarter, and it was due to a decline in likelihood to repurchase our brand (at least we now know what to go work on!).
Index input questions still require ratings scales (preferably NOT numeric scales), so it is not totally immune to human bias. But at the very least, you’re tempering those biases by avoiding purely numeric scales, and distributing the result across multiple dimensions instead of loading them all on one single ratings score.
There will be those who argue that moving away from NPS means they no longer have historical benchmarks with which to measure their performance versus competition. Or that they’ve used NPS for so long, it would just be too challenging to move away from it. Or… Or… To these folks, I suggest you slowly wean yourself off NPS, because the reality is a wholesale changeover can be challenging on multiple levels. But you still need to arm your teams with the information needed to DO something about the findings by kicking off a proprietary index tracking system. Over time, I am confident you’ll find the granularity of results is far more actionable and likely to actually impact the business in a positive way.
Is an index perfect? No. Is it more insightful than NPS? We sure think so. Partnering with a research company that understands how to properly craft research questions and leverages methodologically sound fielding practices will not only identify your brand’s performance relative to competition, but also arm your organization with the context needed to do something about it.
Contact us today to set up a brand index for your organization.