Customer sentiment - getting the best from NPS

17 February, 2015.

Net Promoter Score (NPS) has become a ubiquitous measure of customer sentiment. There is scarcely an organisation that does not use it in some way, with many now directly linking NPS to their internal performance metrics and the remuneration of employees.

However, we should consider what NPS actually represents. There has always been debate regarding the lopsided nature of the 0-10 scale and subjective respondent perceptions of what constitutes a good score. NPS typically invites respondents to consider their overall relationship with an organisation, rather than focus upon specific interactions and experiences. As a consequence, NPS ratings can be influenced by external factors as much as by the customer’s first-hand experiences of the service delivered. This metric is not without value, but does make it difficult to identify issues and implement change in response to shifts in the score.

The significant decline of NPS ratings for financial organisations after the economic meltdown in 2008 provides supporting evidence for this idea. At that time there was a barrage of media coverage regarding the failings within the financial sector that had precipitated the crisis, though for most customers the delivery of the day-to-day aspects of their banking relationship continued much as before.

It is also revealing that the open-ended question that usually follows the NPS rating question, designed to identify specific service failings and causes of customer disquiet, typically delivers only bland and anodyne feedback from those who are classified as ‘passive’. We have all seen lists of verbatims that reveal nothing more insightful than ‘all OK’, ‘no problems’ and ‘suits my needs’, rather than yielding any meaningful insights as to how ‘passives’ might become ‘promoters’.

So it is important to stress the role of NPS within a broader context of performance measures, but the rigour with which many organisations scrutinise wave-on-wave shifts in NPS suggests that these warnings are not always heard.

BVA BDRC increasingly employs longitudinal studies to assess customer experience and service delivery. Some time ago we recognised that post-event research among customers who had (for example) arranged a mortgage, taken out a loan, or made a complaint, could lose a good deal of the granular detail regarding customer sentiment during the process. In many instances it is the overall outcome of the process that significantly influences any post-event assessment. We suspected that linking the NPS assessment to specific recent experiences and interactions would yield more insightful data.

To test this hypothesis, we conducted a substantial online pilot study where respondents identified the particular service interactions with their bank they had recently experienced, ranging from routine transactions such as using an ATM to more occasional events such as having a card stolen. Respondents were then asked to give an NPS rating specific to each of up to three particular recent experiences. The large sample of 5,000 UK adults generated robust sub-samples for all the interactions that were assessed, and also allowed benchmarking of performance across different organisations.

The results? These event-specific NPS assessments typically delivered substantially higher scores than the broader relationship-based NPS ratings, showing that for the majority of service interactions most customers have a positive view of the experience. However, it was also noticeable that those respondents who did not give a positive NPS rating were likely to provide extensive verbatim detail in the follow-up question, describing aspects of the interaction that had not met their expectations, yielding very useful operational-level feedback and identifying areas for improvement.

So, applying NPS to these ‘Moments of Truth’ not only delivers better (and usually higher!) NPS ratings, it also provides more insightful verbatim insights to highlight what underpins customer dissatisfaction.

Find out more about our NPS offering: view our NPS Benchmarking for the financial services.