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Net Promoter Score Advantages and Disadvantages

Net Promoter Score Advantages and Disadvantages

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I've created a Business Leaders’ Practical Guide to Implementing Net Promoter.  Download it Here

Advantages of Net Promoter Score

A lot has been written about Net Promoter Score over the years but the advantages of the approach can be summarised in these seven areas

NPS is Proven to Predict Customer Loyalty and Business Growth

The link between NPS, customer loyalty and business value has been proven across a variety of industries (B2B and B2C) and by a variety of businesses in different places across the globe.

This is a key advantage of Net Promoter – with it you can identify more loyal customers and customers with a higher propensity to spend in cross-sell and up-sell situations.

Alliance company data showing the link between NPS and business growth

Easy to Use

A well designed NPS survey can have as few as two questions, so it’s easy to set up and run the data collection process.

Converting the raw response data into the score can be done easily in Excel / Google Sheets or a range of dedicated software systems.

NPS is Reliable across B2B and B2C

The predictive reliability of Net Promoter has been proven in both B2B and B2C industries so it is applicable to the vast majority of companies.

This post collates information from a variety of B2B and B2C case studies into its use: 35 Net Promoter Score® Case Studies With Links to Business Value

Easy for staff to understand

The emotion behind recommending a company and its connection to customer loyalty is readily understood by staff.

This makes it easy to communicate the importance of the measure than, for instance, a statistically or computer model driven approach.

Provides a Rallying Point for Customer Focus

Just as it’s easy for staff to understand NPS, the “would recommend” emotion provides a clear rallying point for staff in all areas of the business.

The Would Recommend Question Rallies Staff

Allows Benchmarking of Companies Against Each Other

Because NPS uses a standard question and response scale, scores can be benchmarked across companies within an industry. 

Companies with higher scores are likely to be growing faster and retaining more clients than companies in the same industry with lower scores.

The Same Question Can be Used for Customers and Staff

A growing number of organisations are using the same “would recommend” question to understand the disposition of their staff.

Employee NPS, or eNPS, is used in pulse surveys with similar effectiveness to that of NPS.

The eNPS Question

Disadvantages of Net Promoter Score

Even great tools can be used incorrectly and have their effectiveness blunted. NPS is no different. 

Most of the disadvantages commonly attributed to Net Promoter only occur when it is used incorrectly or inappropriately. Below are the most commonly cited cons of using NPS and how not to use it incorrectly.

Can be Gamed When used Incorrectly

Convinced of the importance of NPS many organisations decide to set hard KPIs and give front line staff goals to achieve certain levels.

Unfortunately, this often leads to gaming of the score and what is called Score Begging because front line staff are unable to affect many of the most important customer loyalty leveers: pricing, staff levels, systems, etc.

A better approach is to goal staff on the drivers of NPS or survey response rates.

NPS Score Begging in Action

Sometimes Misunderstood to Be a Measure of Recommendation

Because the key question asks “ would you recommend our company”, people can mistakenly think that it is a measure of how often a respondent would actually recommend the company.

Rather than a measure of actual recommending activity, the willingness to recommend is used as a proxy for the loyalty to the company or the brand.

It should never be considered a measure of word of mouth marketing or similar.

This proxy link has been proven in many studies.

When Used in Isolation, Doesn’t Give Insights into How to Improve

Touted as “The One Number You Need to Grow” in the original Harvard Business review article, some companies misunderstood that all you needed to do was ask the “would recommend” question to be successful.

This is of course incorrect.

You also need to ask questions about what customers liked and disliked about your business so you can understand what needs to change in your business to increase the score.

A well designed NPS survey will do that for you.

Just Collecting NPS Data won’t Improve the Business

Even with mountains of NPS “why” data, NPS can fail if you don’t use it to make changes to the business. 

To be successful you’ll need to run some driver analysis, design some business changes, and make some changes to the business. Only then will you be able to be successful with NPS.

I've created a Business Leaders’ Practical Guide to Implementing Net Promoter.  Download it Here
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