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How NPS could be a powerful tool to improve customer experience

A well-defined NPS hierarchy strengthens the network and enables a coordinated and well-planned execution of the NPS programme

Rakesh Wadhwa        Last Updated: September 25, 2019  | 19:42 IST
How NPS could be a powerful tool to improve customer experience
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Businesses across the world have increasingly started relying on NPS (net promoter score) to measure and evaluate customer experience. Taking US as an example, NPS is an essential tool used by most companies. Silicon Valley start-ups and many Fortune-500 companies have adopted NPS to track and improve customer experience. In India too, companies are increasingly warming up to the idea of measuring customer satisfaction/experience and using it to drive positive change.

What is NPS and how does it work?

NPS measures the customer experience and loyalty towards a brand's products and services. Introduced by Fred Reichheld from Bain in 2013, it is still one of the most commonly used metrics for businesses today.

NPS scores are measured with a single 'Likely to Recommend' (LTR) question survey. The customer is asked questions such as - how likely is it that you would recommend an organisation/product/service to a friend or a colleague? The scores are reported as an index, ranging from 100 to 100. Respondents are asked to give a rating between 0 (not at all likely) and 10 (extremely likely). Depending on their responses, customers fall into one of these three categories:

1. Promoters - Those who give 9 or 10 are typically loyal and enthusiastic customers.

2. Passives - Those giving a rating of 7 or 8 are satisfied but not enough to be promoters.

3. Detractors - They respond with a score of 0 to 6. These are unhappy customers who are unlikely to buy again. They may even discourage others from buying from the company.

Subtracting the percentage of detractors from the percentage of promoters gives us the NPS.

The NPS survey can serve a greater purpose than merely recording customer feedback and arriving at a score. This simple survey helps in garnering broader customer insights, for example, why a customer has given a particular rating. To get the best out of the NPS metric, it's important to set up the right NPS framework which ensures two things:

1. All customers have access to the feedback survey through all their interaction touch-points with the company.

2. NPS programme should become an integral part of organisational goal to make overarching improvements, where every employee becomes responsible for customer experience.

How do you make NPS more effective?

1. Robust technology platform

Setting up a hi-tech technology platform and preparing the backend is the first step of establishing the NPS framework. Deployment of the right technology will enable businesses to automatically trigger the NPS survey from all customer interaction touch-points. Technology also helps in deep data analysis of the customer feedback for accurate identification of customer pain-points. It can also make implementation of a solution easier and faster.

2.Survey construct

To gauge the customer satisfaction levels, one or two more layers of questions may be added to the generic 'likely to recommend (LTR)' question. The other layers need to have the "driver" questions in order to deep dive into customer issues. This will help in identifying the shortfalls in business processes based on which remedial measures may be taken.

3.Pillars of hierarchy

A well-defined NPS hierarchy strengthens the network and enables a coordinated and well-planned execution of the NPS programme. It is necessary to set up an entire network of people and assign pre-defined roles to them - for calling up customers, taking their feedback, and addressing customer pain-points by carrying out root cause analysis of the issues. Upholding high-level of governance standards in every level of the hierarchy ensures fair and unbiased surveys and better identification of customer pain-points.

4. Using feedback data for changing organisational practices

The test of success of an NPS programme is in its ability to trigger changes in processes and practices within an organisation based on the customer feedback acquired through NPS surveys. The survey results may bring up several problems that were not identified earlier. It's important to conduct a root cause analyses to understand and act upon these problems. Examples of innovative use of NPS by companies.

Good NPS scores bolster an organisation's ability to retain customers. Adopting NPS best practices can bring about significant uptick in the conversion of detractors and passives to promoters. Besides happier customers, a good NPS programme can also become a major driver of transformation for an organisation. Adopting NPS can change the way a business is conducted if the companies become flexible to alter the business processes based on customer feedback. Better customer experience automatically leads to higher growth of a company. Companies, therefore, should focus on putting in place the right framework for implementing NPS in a more effective manner.

(The writer is Chief Marketing and Customer Officer at Future Generali)

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