Problem 5 – You Don’t Know
Your Own Performance
Lack of rules for measuring and publishing NPS results causes problems.
Big Business likes NPS. Dozens of listed companies go so far as to publish their NPS as annual reports or as commentary in quarterly financial market statements.
One of the most compelling arguments for measuring customer experience using NPS is the desire to calibrate performance. Many companies make public their NPS figures. Far more rely on internal NPS metrics. They use them to calibrate performance of their business and to compare across operating units, or geographies, or product lines.
In the majority of instances, their performance measures are wrong. Oops.
Not a GAAP metric
NPS is not a GAAP metric. Its original aspiration was to rival financial reporting as a critical business metric. But careless implementation, coupled with the inherent variability of the metric, has resulted in many companies experiencing the worst of all worlds. They have belief in a level of performance that just isn’t correct.
What is correct? Look at the question from the point of view of our wants. We want to know, truly, how loyal our customers are. We want to know their level of loyalty in measurable form. We want a measure that clearly correlates to financial performance. We want to feel sure that improvements in our metric will result in improvements in our financial results.
But NPS – unlike, say, revenue – doesn’t come with an independently audited set of clear rules. How you measure it, when you measure it, and whom you measure are all subject to inadvertent or deliberate error.
The inherent errors of survey-based data collection mean that at best most NPS metrics are directional rather than precise. At worst, they are not much better than heroic guesses.
“It ain’t what you don’t know that gets you into trouble.
It’s what you know for sure that just ain’t so.”
– THE BIG SHORT, QUESTIONABLY ATTRIBUTED TO MARK TWAIN
Businesses misread their own results
Furthermore, businesses misinterpret the results which they do have. Absolute scores don’t mean much in CX. Winners are determined by competition within an industry, but few companies fully understand how to compare with direct competitors (let alone the more threatening substitute products that customers may choose).
Aggregated NPS across multiple business lines means little in large companies with portfolios of customers, products and business lines whose growth and profitability prospects vary significantly. Sometimes, for instance, you don’t want to try and win every NPS battle. You do want to win the ones that have growth and profit pools.
It is hardest for B2B companies. They live in heterogeneous worlds of client accounts, not end-consumers. They struggle to read the significance of NPS data that was created out of consumer market behavior.
You might not think you have a CX data design, but you do.
It’s about data design
We can resolve these challenges. The answer requires leadership to see beyond simple metrics. They must recognize that all CX data is a product of data design.
You might not think you have a CX data design, but you do. If it’s not explicit, or not carefully crafted to reflect your business, then you can bet it’s a poor design generating poor data.
Mark Twain was right. Basing your business decisions on faulty data is worse than admitting that you have no idea of the health of your customers.
You can find the next problem statement, Problem 6: The Empire Does Not Strike Back.
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