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April 15, 2020

Why NPS is Not the Best Metric to Monitor Customer Experience

Customer Experience

Many, if not most, businesses today use a Net Promoter Score metric tracked with NPS surveys to monitor their customer experience. There are good reasons why companies use NPS, and it can be a valuable tool for rallying organizations around customer experience and customer satisfaction.

If you aren’t familiar with Net Promoter Score, it is a customer loyalty metric that measures the likelihood that a customer will recommend a company's products or services to others. It’s calculated by asking customers to rate their likelihood to recommend a company on a scale of 0 to 10, and then categorizing their responses as either Promoters (9-10 rating), Passives (7-8 rating), or Detractors (0-6 rating). NPS is then calculated by subtracting the percentage of Detractors from the percentage of Promoters.

Unfortunately, NPS is an unreliable indicator of customer health. As we saw with the pandemic, the world can change in an instant and shift lives dramatically. For every business, small or large, the ability to quickly adapt to customer needs is necessary to overcome new obstacles and NPS doesn’t give businesses the real-time insight that they need.

Here are a few of the loudest criticisms of NPS:

  1. It’s a snapshot in time: NPS only measures the customer's current sentiment and does not take into account their past or future behavior.
  2. It’s based on a single question, “On a scale of 0 - 10, how likely are you to recommend our business to a friend or colleague?”: This doesn’t adequately capture the complexity of a customer's experience.
  3. It’s not directly tied to business outcomes: NPS does not directly measure things like revenue or profitability, so it is difficult to know how changes in NPS will impact the business.
  4. It’s subject to bias: The way that the NPS question is phrased and, more importantly, when it is presented influences how customers respond, which affects the accuracy.
  5. It’s not actionable: NPS does not provide specific information about what is driving customer satisfaction or dissatisfaction, so it’s hard to know where to start optimization for CSAT.

Companies seeking to monitor and predict retention should start to seek out other customer satisfaction metrics to guide their strategy. If you're ready for a new way to measure customer satisfaction, check out our step-by-step guide to moving beyond NPS.

NPS is a noisy metric on good days. Today, the noise is deafening.

NPS provides a broad, holistic picture of the customer experience. When someone is asked how likely they are to recommend a product or service, they are forced to think about their entire experience with it, not just one particular moment or touchpoint. However, this broadness also encourages people to take external factors into account.

Anyone who’s ever looked through open-text follow-up responses to NPS has seen something along the lines of “I love it, but I don’t have any friends or colleagues who it’s relevant to, so I don’t recommend it.”

This is what we call noise in the data. Someone has given you a low rating, but not for the reasons you intended when you asked the question. Instead, an individual’s inability to think hypothetically has muddled your results. This is one of the primary failings of NPS: that the question we ask — whether users would recommend us — is not the question we actually want answered, i.e. whether users are satisfied with, or loyal to us.

Your customers’ actual experience with your product or their own likelihood to continue using it may or may not have changed. But the environment they are in is always fluid. What this means is that your NPS score, and changes you see in it, are more difficult to interpret. This can be especially true in times of economic downturn and can guide you in the wrong direction.

  • Scenario 1: Your NPS score is stable, but you’re bleeding customers. Why? Your customers may like your product as much as ever and continue to recommend it, but be unable to afford it for themselves.
  • Scenario 2: Your NPS score is dropping, but without an equivalent increase in churn. Why? Your customers may continue to find your product essential, but avoid recommending it to personal connections who have lost jobs or are focused on cost cutting.

The most likely scenario is that a combination of both of these factors is influencing how customers respond. Two different kinds of noise, both competing to completely blow up the reliability of your NPS score - making it virtually unusable.

What to do about it

If you’re already tracking NPS, you can continue to do so. We even have a NPS template you can use, but you need to know more about shifting customer priorities than what NPS can tell you.

Do make plans to add additional CX metrics to your regular tracking as soon as possible. Retention is key for many companies right now, so focus on metrics that measure retention directly.

Here are a few metrics to consider:

  1. Customer Satisfaction (CSAT) Surveys: These surveys ask customers to rate their satisfaction with a specific interaction or experience, on a scale of 1 to 5 or 1 to 10. We recommend 1-5, but with Sprig you can include custom scales and even emojis. CSAT surveys are better than NPS in giving you insight into the specific aspects of the customer experience that drive satisfaction or dissatisfaction.
  2. Customer Effort Score (CES): This metric measures the effort that a customer has to put in to resolve an issue or accomplish a task. CES is typically measured on a scale of 1 to 5, with a lower score indicating that the customer had to put in less effort. CES is great when you want to identify those areas in your product where the customer experience is okay, but could be streamlined or improved.
  3. Customer Loyalty Index (CLI): Use this metric with caution, because it is subject to some of the same influencing factors as NPS. CLI measures the likelihood that a customer will continue to do business with a company over time. It is typically calculated using a combination of factors, including customer satisfaction, overall loyalty, and NPS/likelihood to recommend.
  4. Customer Retention Rate (CRR): This metric measures the percentage of customers who continue to do business with a company. A high CRR is generally considered to be a sign of strong customer loyalty.
  5. Customer Lifetime Value (CLV): This metric measures the total value that a customer is expected to generate over the course of their relationship with a company. CLV identifies high-value customers and can help you target product builds to your most valuable customers.

Do ask companies about how the current environment is affecting their needs.

Don’t email users a clunky 20-minute survey to collect these metrics. It may be perceived as insensitive and besides, it’ll be a slow process when you need to move rapidly.

Do consider in-product surveys that ask for feedback as users experience the product.

If you’re unsure how to ask these questions to your customers, or what the best CX strategy is for your business, please don’t hesitate to reach out. We would be happy to help you design the right approach for you and your customers.

About the author

Allison Dickin

Survey fanatic and customer experience advocate. Former Research Director at Yale School of Management and Senior Research Manager at Etsy. Bucknell and University of Chicago alum.

Allison Dickin Headshot

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