Do you measure the right things, and do you measure it properly?

“We all know it –  On a scale from 0-10 how likely is it that you will recommend our firm or product to a friend or colleague?”, the classic NPS question hunting for measuring and creating loyal customers. We are increasingly being exposed to this question and you could discuss if we have reached a saturation point and if the model becomes devalued or diluted because of this. Therefor I will share my reflections on how you measure the right things and measure it properly. This is how Per Østergaard, lector at CBS and leading expert in CX and digitalization, begins.

Let us assume that NPS is the right measuring tool

Your management paradigm, your mental management cage, will set the scene for how you use NPS. Is it driven by a mindset that reflects self-expression and internal focus that is projected out to the world? The starting point here is that we develop products and services based on internal expertise (Blue paradigm). Here NPS data will be a tool to promote communication and prevalence of your products and services to the customers.

Or are you more focused on the customers’ thoughts and feelings, and do you want insight into the customers’ preferences, needs and motivations? (Red paradigm). In this management paradigm NPS data is used to deliver more meaningful products and services to the customer. The NPS measurement will typically be analyzed and used with other data sources to give the best insight into the customers behavior and thus there is a better foundation for mutual value creation.

Is your mindset to develop innovative ideas with the customers, show trust in their perspectives and invite them on a cooperation and development journey? (Yellow paradigm). Here the NPS measurement will be used to catch up and take advantage of new and visionary inputs and knowledge from the customers. Of course, based on seeing the NPS results in context with other data sources.

Is your approach to the market holistic and empathic, in interaction with the wider society? (Green paradigm). Then NPS will be used to improve and renew sustainability and ethical interaction with all stakeholders. Read more about the different management paradigms here (In Danish).

What if NPS is the wrong tool?

To this Per argues: “In relation to the customer journey and where you are located, could it then be worth a thought to consider if CSAT and/or CES could be better options? And if more of these measurements could supplement each other? I think that you should look at your measurements and customer insights in correlation and set these in relation to the management paradigm and the firm’s strategy.”

What if NPS is used incorrectly?
Per elaborates: “My belief is that NPS is often being used incorrect. You could talk about both abuse and misunderstanding of the concept. Firms by the dozen have destroyed a valuable measurement by making NPS a goal, turning it into a number, without understanding what the basis of the number is! It is contributing to ruin the credibility and the benefit of NPS”.

How can NPS be used correctly?
It is simple Per says. “Look at data in a context with other measurements and information. Look at what influences there are, in relation to the result? How has the interaction been between the customer and the firm? Which channels are being used? Where are the challenges – good or bad experiences between the customer and the firm?”

Concluding Per has described the best advice to get started with measuring NPS today:

• Start with acknowledging your management paradigm – Which mental cage are you in?
• Assess how these fit with the customers’ expectations
• Assess how frequently there should be measured (frequency) and how representative the measurement is (validity)
• How relevant is the measurement? Does it make sense in relation to the balance between insight and dilution?
• Use the measurement actively and proactively in the firm