NPS doesn’t say anything particularly useful
cranberryblog.substack.com
NPS doesn’t say anything particularly useful
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Re: NPS doesn’t say anything particularly useful
#2The point of NPS vs free cash flow or operational metrics is that it is in theory a leading indicator instead of a trailing indicator.
It's nice (but a bit too late) to know that your business is screwed because your customers left, it's another to know that your business is about to be screwed because your customers are on the verge of leaving if an opportunity appears.
The criticisms of NPS pointed out (that it's a measure of a high-variance metric) are fair, but the conclusion is not.
Re: NPS doesn’t say anything particularly useful
#3The point of NPS vs free cash flow or operational metrics is that it is in theory a leading indicator instead of a trailing indicator. It's nice (but a bit too late) to know that your business is screwed because your customers left, it's another to know that your business is about to be screwed because your customers are on the verge of leaving if an opportunity appears. The criticisms of NPS pointed out (that it's a…
What exactly would you suggest it's a leading indicator of? Churn?
Ultimately if it matters, it should have to be an input to the cash flow time series -- mediated by churn -- no? (Article means to frame free cash flow as a series rather than a point-in-time value).
If you're interested in forecasting, as a company, you should know the things that mean your customer is not doing well within the specific context of your specific business. E.g. in software, you should have a customer health score that's built up from product data. Or you could ask simple questions that are easily interpreted, e.g. asking "how would you rate X's value for money," or "how satisfied are you with X," or even "have you recommended X in the last Y months." These things have a cleaner relationship to future business metrics and a tidier interpretation.
Re: NPS doesn’t say anything particularly useful
#4I didn't see discussed here the main drivers you might want NPS vs. outcome- (and company) specific metrics:
1) it's harder to game and/or bullshit. This is a massive issue with surveying customers and then using their responses to feed back into internal performance goals & rewards.
2) because it has grown to be such a common customer experience metric, it's possible to benchmark against others, which isn't really possible with question types that are very specific to your business
I'll agree that NPS is overrated, mostly because the Net Promoter organization and survey companies have spent large amounts of time and money pushing it as The One True Metric for decades, but it still has its merits and its place.
Re: NPS doesn’t say anything particularly useful
#5My "problem" with NPS is when essential services, which I have next to no choice over using, ask me if i would recommend them to others.
No, IRS, I would never recommend your service to friends or family. That's not really indicative of anything.
Re: NPS doesn’t say anything particularly useful
#6The point of NPS vs free cash flow or operational metrics is that it is in theory a leading indicator instead of a trailing indicator. It's nice (but a bit too late) to know that your business is screwed because your customers left, it's another to know that your business is about to be screwed because your customers are on the verge of leaving if an opportunity appears. The criticisms of NPS pointed out (that it's a…
What exactly would you suggest it's a leading indicator of? Churn? Ultimately if it matters, it should have to be an input to the cash flow time series -- mediated by churn -- no? (Article means to frame free cash flow as a series rather than a point-in-time value). If you're interested in forecasting, as a company, you should know the things that mean your customer is not doing well within the specific context of yo…
My own understanding is that it’s supposed to be a prediction input organic growth and nothing more. All it’s really telling you is whether a customer is likely to provide you with another customer, which is why only really high values answers matter, because “hell yeahs” are all that really matter.
I’m skeptical as to its usefulness even for this, but most companies I’ve worked for use it as a general KPI which is even more aggravating.
Re: NPS doesn’t say anything particularly useful
#7I suspect the concept of NPS is, if not the source of, a major driver of the whole "anything less than 10/10, 5 stars, etc. is basically a fail" meme. There seem to be signifiant toxic effects from this on customer-facing employees, in my experience.
Re: NPS doesn’t say anything particularly useful
#8NPS = Net Promoter Score
> measures customer experience and predicts business growth
Re: NPS doesn’t say anything particularly useful
#9I see proposals against NPS like this from time to time, but they always tend to ignore the underlying science that went into making NPS in the first place, primarily that there was a very strong correlation between the calculated NPS score and business performance.
Also, I find that many of these articles have somewhat of a caricaturish view of how NPS is used in the real world. "It's not 'oh no, our NPS score is down, let's hire more people to focus on customer 'happiness'", it's instead that NPS can be like a canary in a coal mine - an unexpected drop in NPS is something to investigate and get more information on what went wrong, usually from more detailed/free-form questions in the NPS questionnaire.
As a software engineer I love reading our NPS reports, because they always have great tidbits of info that are often difficult to deduce just by looking at standard analytics.
Re: NPS doesn’t say anything particularly useful
#10My "problem" with NPS is when essential services, which I have next to no choice over using, ask me if i would recommend them to others. No, IRS, I would never recommend your service to friends or family. That's not really indicative of anything.
No PatientCo, I did not enjoy paying my medical bills through your system. I have no intention of recommending your bill payment system to my family. Why is this even asked?