Net Promoter Score, also known as NPS: We all know it, we all use it and we all (mostly) love it. I understand why: it’s a reliable and consistent way to gauge current customers’ satisfaction. Most of all, it provides a great benchmark to help your team identify and prioritize improvements to products and services.
But if you’re using NPS to assess brand equity and guide your brand-building decisions, there are five (of many) reasons why I encourage you to think again:
Reason 1: NPS doesn’t connect to tangible business outcomes
To calculate NPS score, brands send out a survey asking consumers a single question: “On a scale from 0-10, how likely would you be to recommend to a friend?” By design, NPS helps executive leaders understand the ratio of brand “promoters” versus brand “detractors,” which is incredibly helpful if you’re trying to understand current positioning and benchmark against competitors. However, NPS doesn’t connect to business outcomes like revenue and enterprise value. We used BERA’s predictive brand tech platform to calculate whether there was a connection between NPS improvements, revenues and stock prices. In short, we found a negative correlation between NPS and revenue and no correlation to enterprise value.
Reason 2: NPS doesn’t illustrate brand positioning against direct (or indirect) competitors
The question used to drive NPS is one-dimensional, which means it offers one-dimensional results. Consumers’ responses are only tied to your individual brand; not how your brand measures against direct or indirect competitors.
For example, executive leaders Saks Fifth Avenue, for example, would get a lot of value from measuring brand strength against Neiman Marcus (a direct competitor) and Rent the Runway (an indirect competitor). These insights would help the Saks team get more context into consumer preferences and decision-making. It also would help the team understand how connected specific consumer demographics and even specific territories resonate with the brand versus other available options.
Reason 3: NPS only focuses on consumers who have actually purchased from the brand
There are many reasons why having a powerful brand is important, but building awareness and acquiring new customers are two of the most important. However, NPS only focuses on individuals who have actually purchased a product or service from your business, which means you have limited insight into your total addressable market. Even worse, you have zero understanding of how your potential customers perceive the brand and how likely they are to turn to you over other available options.
Reason 4: NPS scores leave out a sizable pool of consumers
NPS is an 11-point scale. Anyone who gives a score of 0-6, they are considered “detractors.” Those who give a 9 or 10 are “promoters.” Those in the middle, offering a score of 7 or 8, are “passives” and they are completely removed from the NPS calculation. That means NPS scores are calculated based on the input of your extreme brand fanatics and your most angry customers. Although passives may not currently feel strongly about your brand, this could be a great group to target for further nurturing.
Think about it: these consumers are almost promoters but may want to feel more connected to your brand. Conduct more pointed research within this group, and develop more targeted campaigns and offers for them. It is a concise and cost-effective way to strategically build your brand.
Reason 5: NPS scores could be “gamed”
Your NPS score is contingent on the number of responses you get. To drive your scores up, your marketing team may send a few more blast emails or reminder texts. Or maybe, your sales team will make a few more targeted calls to happy customers. This is just one way to game your NPS scores.
Some companies even coach associates and call center reps to take extra time to explain the scoring process to sway consumer responses. The only way you’re going to get authentic, accurate and meaningful data to build your brand is if you give consumers an open forum for sharing feedback.
These are just five of many more reasons NPS shouldn’t be your North Star brand metric. Click here to get the industry insights you need to build an impactful brand.