What are the main advantages and disadvantages of Net Promoter Score (NPS)?
There’s no doubt that Net Promoter Score is one of the most popular metrics out there. NPS works as a loyalty metric that helps you improve customer loyalty over time.
You can easily measure your employee and customer feedback about your brand with the help of it. But, here’s the thing: NPS is not the perfect metric to track customer advocacy.
NPS score is not a complete metric. It has its advantages and disadvantages. But most people talk about the advantages of NPS, which is biased because nothing is perfect, right?
Well, that’s why here we’re going to share our unbiased take on the NPS score. In this article, we discuss the advantages and disadvantages of NPS. And how you can use it effectively to get better results.
What is a Net Promoter Score?
Net promoter score was originated in 2003 by Fred Reichheld, a partner at Bain & Company. His goal behind developing an NPS score was to help businesses get a quick response to understand customer loyalty and satisfaction.
Net promoter score is a method of sending a single survey question that asks customers to rate business products, services on a scale of 0-10.
How to Calculate NPS?
Calculating NPS is as easy as winking. All you need to do is ask a simple question “how likely are you to recommend us on a scale of 0-10?” Based on the responses, you can segment your respondents into three categories:
- Promoters: These are your most loyal customers. They will give you a rating of 9 or 10.
- Passives: Passives are neutral. They will give you a score of 7 or 8. They are satisfied with your brand, service, or product, but you can’t expect them to be your loyal advocates. That means they may not promote your brand to others.
- Detractors: Customers that give you scores between 0-6 are less likely to promote your brand. They are known as detractors.
Now you can calculate the NPS score by subtracting the percentage of detractors from your promoters. For example, if 70% of your respondents are promoters and 20% are detractors, your NPS score is 60.
The Real Advantages and Disadvantages of NPS
You already know that NPS score has the power to measure your customers’ loyalty. Using a single question, you can evaluate whether your consumers are having problems or not. This simplicity is one of the many reasons why businesses prefer calculating the net promoter score.
However, we can’t biasedly say NPS score is absolutely a perfect metric to gauge your customer experience. It comes with its fair share of limitations and advantages. We’ll first talk about its advantages and move on to its disadvantages later in this post. So, without waiting further, let’s read on…
The Advantages of NPS
There are loads of reasons why the NPS score holds a soft spot in maintaining customer satisfaction. Here are the pros of NPS:
1. Simplicity at its Best
From your customers’ perspective, there’s no doubt in the user-friendliness of NPS surveys. Customers love it because they are quick, short, and straightforward. All they need to do is answer a simple question “how likely are they to recommend your business?products?services to a friend?” And, that’s it, they’re good to go!
From the business perspective, the NPS score helps you to segment your consumers into three groups (detractors, promoters, and passives) easily. The simplicity of NPS questions lets you analyze the results without much hassle. You can easily measure and benchmark the scores and compare them with your competitors.
2. Offers Feedback with Clarity
Net promoter score helps you to get clear feedback than any other survey method. The NPS survey is short and straightforward. This encourages your respondents to share their feedback without getting bored. People tend to abandon a survey if it gets too long and boring.
And it’s always beneficial for your business to gather consumers’ feedback with clarity. As per Gartner’s research, companies that gather and analyze customer feedback are more successful in implementing customer experience effectively.
3. The Loyalty Metric
NPS score is mostly popular as a loyalty metric, and it lets you analyze your customers’ loyalty. Using a net promoter score, you can understand how likely your customers are to recommend your brand to their friends and family. That means NPS plays a big role in establishing word-of-mouth marketing. And according to the Neilsen report, 92% of customers believe suggestions from friends and family rather than advertising.
Customers who come from recommendations and referrals are profitable for businesses as they are more loyal. Therefore, if you get a good NPS score from your brand promoters, you can easily identify who will be more willing to spread positive reviews about you.
A great example of using an NPS score is Airbnb. In 2013, they organized an NPS program to witness how it adds value to their feedback program. They collected 600,000 feedback from their guests who booked a stay with Airbnb. And the result? Well, two-thirds of the guests submitted feedback, and 300,000 of them gave a score of 10. Only 2% of the guests were detractors.
4. Employee Engagement Metric
Alex and his colleagues aren’t happy with the new skill development program in their company. After all, the training resources are of poor quality. And there’s nothing worse than attending five hours long boring training sessions!
This is the reality of several organizations. They don’t take any action to understand how their employees feel about their new development program, organizational culture, or new benefit program. As per Achievers report, only 19% of employees feel engaged in their company. Moreover, a survey states that a whopping 15% of respondents agreed that their organization is horrible when it comes to acting on feedback.
This is where the net promoter score comes into the picture. It helps you to gather employee feedback and maintain engagement in the quickest and straightforward way. You can use an NPS score survey to ask your employees what they think about your organization. This type of survey helps you to collect rich feedback about what drives employee engagement and what’s not.
Using employee net promoter score, you can understand what makes your employees happy, whether they’re achieving continuous improvement with their skills, or not. Once you pinpoint what makes your organization better and lacking, take the necessary action to implement change.
However, eNPS alone won’t help your company increase employee satisfaction or engagement. You have to maintain transparency and share the results of the survey with your employees to make them feel more involved and valued.
5. Meet Your Brand Advocates
NPS score doesn’t only give you clear feedback from your customers and employees; it also helps you to meet your brand advocates. Yep, you read it right! You can understand who is going to be your brand advocate using the net promoter score.
When your customers give you a good NPS score on an online survey, it’s obvious that these customers are going to advocate your products and services to the world.
You can nurture these promoters to ensure they talk positively about your brand, and If they promote your brand positively, it will show how strongly they believe about your company.
“Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you.” — Chip Bell, Author of Taking Their Breath Away: How Imaginative Service Creates Devoted Customers. (Forbes)
If you use net promoter score regularly, you can identify whether you’re losing your brand advocates or gaining them more. Thus, you can come up with new business strategies to ensure organizational growth. Always remember, the more advocates your company has, the better results you’ll gain in the long-run.
6. Quick Follow-Ups
As we’ve discussed earlier, the NPS survey’s nature is quick, short, and straightforward. This helps you to collect feedback from your consumers and employees as soon as possible. You don’t have to spend years collecting data to analyze it. With NPS software like SurveySparrow, you can collect the right insights in real-time.
This gives you a stellar opportunity to contact your displeased consumers or employees. For example, if one of your employees or consumers gives a low NPS score, you can immediately send them a follow-up survey or mail asking what’s wrong and how you can improve your services/products. Resolving your customers’ or employees’ concerns should always be your top priority.
You can also use the follow-up results to address your business issues and eliminate the chances of losing your customers from the same situation again.
7. Better Customer Journey
NPS score enables the opportunity to enhance your overall customer experience journey. With NPS surveys, you can capture your customers’ feedback at various points of their journey. For instance, you can stay relevant by identifying the recent experience of your customers with your brand. Just simply ask them a question- “How would you rate our company on a scale of 1-10 based on your recent experience?” And wait for their response to get valuable feedback.
Here are some ways you can implement NPS survey at various touchpoints of your customer journey:
Post-Purchasing Survey: You can provide an excellent post-purchasing journey to your customers by effectively using the NPS score. If your consumers have made any purchase, placed an order, or done any business with your brand, send NPS surveys through email or SMS. This will let you know your customers’ purchasing experience and feelings. If they face any issue while doing business with your brand and give you a low NPS score, make sure to immediately follow up and resolve their issues.
Customer Support Survey: Customer support surveys are a great way to enhance your consumers’ journey. Right after a business transaction, you can send them an NPS survey to get their feedback. If you get negative feedback, immediately call that customer and provide them customer support. In fact, you can send an NPS survey after the call to rate their calling experience with your brand.
SurveySparrow’s NPS software offers various features like APIs and Webhooks. Also, you can integrate this software with tools like Salesforce, Zapier, HubSpot, etc. This will help you to automate the NPS survey at different points of the consumer’s journey.
So, we pretty much covered all the important advantages of using NPS score for your business. However, NPS scores aren’t a miracle metric, and it can’t solve all your problems. It comes with its own fair share of limitations.
Read on to know the disadvantages of the NPS score so that you can use it for the right purpose, without any big blunder!
The Disadvantages of NPS
Well, to be honest, the NPS score doesn’t have a lot of disadvantages. Still, here are few cons of NPS you should keep in mind while using it next time:
1. Don’t Depend Blindly
Yes, it’s true that net promoter score surveys are extremely simple and quick to use. Most companies rely on NPS scores too much to understand their customers’ loyalty.
The truth is NPS scores aren’t a magic wand that can retain customers with just one question. It’s not possible to understand your customers’ feelings completely. So, don’t depend on the NPS score blindly. And don’t ignore the impact of using customer feedback surveys because NPS alone can’t give you all details about a customer’s specific experience with your brand.
2. NPS Score Doesn’t Provide Deep Insights
Another issue with the NPS score is that it doesn’t give deep insights about your customers, stakeholders, employees, and, most importantly, your future customers. With an NPS score, you can ask only one question- “what someone is likely to do?”
And that’s not enough to understand why someone gave you a positive or negative rating. You don’t get a chance to ask them why they like to do business with you, what your drawbacks are, and how you can improve in the future.
3. NPS Score Doesn’t Address Employee Issues
NPS score is not potential to understand your employees too. You can ask them to rate your company on a scale of 1-10, but you can’t ask them about their feelings and wellbeing. Especially after the covid-19 outbreak, it has become extremely important to ask employees about their wellbeing and mental health. During this crisis, approximately 5.5 million employees don’t feel mentally healthy. But, only 50% of employees are comfortable discussing their mental health issues. But employees can’t share their feelings by giving ratings, right? They need something extra to express themselves more.
How to Resolve the Issues with NPS
1. Ask Engaging Questions
NPS score alone can’t save you. Mix it up with follow up questions. And when it comes to asking deep, insightful questions, go with survey software. Engaging surveys get 40% more response rates than any other survey method. Here is the follow-up question from all 3 categories that you can ask to get better results:
- We’re glad you liked our service, would you like to talk about us on Twitter/Facebook?
- Thanks for the feedback. Would like to share the reason behind your feedback?
- Thanks for your feedback. Would you like to tell us how we should improve our customer support calls?
With survey software like SurveySparrow, you can build, integrate, share, and embed your surveys. From opinion scale, NPS score, rank order to multiple-choice questions, you’ll get myriads of question types with this software.
The versatility of survey software will allow you to ask necessary questions to understand your customers well. You can ensure high open rates by sprinkling a bit of creativity using video, images, GIFs, emoticons, and much more.
2. Take Advantage of an All-in-one NPS Software
Using an all-in-one net promoter score software, you can collect, analyze employee and customer feedback effortlessly. NPS software is the best fit to collect data as it got some amazing features:
Follow-up Questions: You can find the why behind your customers’ NPS score by adding follow-up questions. You can add open-ended questions to give an opportunity to share in-depth insights. You can even send custom follow-up emails to your promoters, passives, and detractors via NPS Software.
Automation: Automate the NPS score surveys based on your preferred time, frequency, and contact list. For example, you can automate surveys based on triggers. Suppose your customer signs up for a trial, subscribes to your application, or contacts your support center. In that case, they’ll get an NPS score survey automatically on their email or SMS to rate their experience.
Gather Data: With effective NPS software, you can gather information in real-time. And you can analyze and filter the responses from your promoters, passives, and detractors to get better results. You can even map your customers’ journey precisely from all the results and interactions.
The Key to Use NPS Effectively
Several companies use NPS score as a vital part of their customer relationship management strategy. If your company is thinking about using NPS score, make it more effective by integrating it with your CRM software. After all, a basic NPS score survey can’t offer you deep insights easily. But integrating it with CRM will help you to identify your customers’ feelings. This will give you a 360-degree view of your consumers.
SurveySparrow’s capabilities with API, Webhooks, integration with CRM, internal communication platforms give you the best option to get a holistic view of your customers’ experience. By integrating NPS with crm you can give your customers an automated experience and gather data constantly to understand their feelings truly.
Let’s Wrap Up
So, now you know the NPS score is not a perfect metric. Also, it doesn’t give you rich insights into how your customers feel about your business. But with the right NPS software, it can undoubtedly be a beneficial metric.
Lastly, we can say the NPS score is just a first step to long-term business growth. Only after analyzing the results, the real work begins. And regardless of what scores you receive, the real value of NPS lies in implementing changes and driving improvement based on the scores.