Source: John Spade under Creative Commons license.
The Wall Street Journal published an article yesterday that, was, in my opinion a long time coming: a thorough critique of the now-ubiquitous Net Promoter Score (NPS). The article stands well on it's own, but the best part was the tough critique offered by Fred Reichheld, who originated the NPS in 2003:
“I had no idea how people would mess with the score to bend it, to make it serve their selfish objectives.”
Yep, the author of the book that launched the NPS is calling it out for what it has become: a beast that has gotten completely out of hand. Even more frustrating, the origin of the NPS was meant to truly transform how businesses thought about growth. One of the core ideas behind the NPS was to distinguish sustainable growth from happy (or even delighted) customers from growth due to punitive, exploitative, or even deceptive revenue practices. (think late fees on Blockbuster videos or the $10/gallon fee for Hertz to refill your tank of gas). Reichheld refers to the margins from these practices as sources of "bad profits." Per Reichheld:
Bad profits choke a company's growth by creating detractors whose dissatisfaction blackens its reputation. They demoralize employees and leave the company vulnerable to the competition. They make a mockery of the Golden Rule—that we should treat our neighbors the way we would like to be treated.
Note the use of the term "detractors" in his quote... sound familiar from your last NPS survey? The detractors you are trying to identify are the people Reichheld mentions above: customers who are calling you out for bad practices that will drive them away as soon as they find a viable option. If a company's revenue growth is driven by bad profits, then a well-designed NPS program will surface a lot of detractors, which should trigger a deeper-dive by the company's management.
On the other side of the NPS spectrum are the delighted and loyal customers who are happy to be advocates for your company and your brand. Reichheld sums it up this way:
...in most of the industries that I studied, the percentage of customers who were enthusiastic enough to refer a friend or colleague—perhaps the strongest sign of customer loyalty—correlated directly with differences in growth rates among competitors.
The origins of NPS were noble: use a simple question to help companies grow and prosper by increasing loyalty through an emphasis on good profits. It's the kind of insight that should and did engage business leaders around the world. Grow, but grow the right way.
So what happened?
I guess it was inevitable, but companies and consultants latched onto the NPS and twisted into something it was never meant to be. For example, one of my former employers used an "Employee Net Promoter Score" to evaluate employee satisfaction. Of course, managers were evaluated on their staff's ENPS, so come survey season, the sales job was on. E-mails and town halls proliferated to make sure we were all happy and, if not, knew to use other channels than the ENPS survey to vent our frustrations. The process became similar to the "customer satisfaction survey" you get at your auto dealer.... the one where the employee basically tells you to give him or her five stars or they will lose their jobs.
The bottom line is that, unfortunately, the entire NPS process has been ruined and in my opinion, most companies will gain little from using it.
All hope is not lost, however. If a company is willing to start over and design a real NPS-driven program to understand customer loyalty, advocacy, and dissatisfaction with an eye towards understanding its true bases for sustainable growth, then the program might just generate some real value. Just remember what it was designed for, keep it away from the employee evaluation process, and focus on learning and improving rather than bragging and bumping up your bonus.
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