The cover story of the June issue of Fortune Small Business (FSB) is about a customer metric called Net Promoter Score (NPS). NPS, championed by Frederick Reichheld, measures customer satisfaction and referrals by calculating the promotion of customers who are promoters minus detractors.
As I noted in feedback to FSB, it is amazing to me how many people are reaching for the magic potion to solve their customer satisfaction issues.
If only customer satisfaction could be “fixed” with a simple number like NPS.
But life isn’t that easy. In the early 1990s , I helped build the customer loyalty program for a Fortune 500 computer systems company. We looked at various components of satisfaction and loyalty and we asked the NPS questions that Reichheld is now championing as a panacea.
What we found is that recommendation levels are very much culturally dependent. That means in certain countries or with certain ethnic groups scores will be inherently low or high, based on cultural norms, and there isn’t much you can do to change them.
For example, we had a huge market share in Japan and an extremely loyal customer base that was eager to repurchase our products. However, our lowest recommendation scores *worldwide* were always in Japan. Why? We began to realize that the Japanese are not likely to offer recommendations to anyone on anything–even when they love the product. Similiarly, we had extremely high recommendation scores in Latin countries, where customers are more open and more likely to make recommendations, yet this didn’t necessarily correlate to market share.
We also found that what gets measured, gets managed. A focus on improving those recommendation scores that could be influenced distracted resources from fixing the real problems driving satisfaction and loyalty. When compensation is tied to a metric, employees will find a way to help move the metric–regardless of whether or not that achieves the bigger issue of increasing customer satisfaction and loyalty.
Since then, I’ve had the opportunity to do business with organizations that use NPS as a key metric. Heaven help you if you are ever labeled as a negative promoter (as I was with one rental car company who prides themselves on their adoption of NPS). The customer service I received was horrendous and all my attempts to get the situation resolved–up to the president of the company–were met with a cold shoulder. I was labeled a detractor and the system is set to reward those employees who move moderately happy customers to promoters, not to worry about those who are obviously unhappy. Interestingly, unhappy customers are more likely to tell many others about their bad experiences, and no one bothered to consider what the cost might be to ignore a detractor over the expected lifetime of my car rental experience. Let’s just say, it’s been their loss.
There are no magic potions. That’s true whether we’re talking about losing weight, getting rich, or increasing customer satisfaction. The simple truth is that nothing substitutes for hard work and discipline to attack the root cause of a problem. Be wary of those who promise to solve also your problems with one simple solution. Caveat emptor.
