Anyone that has been reading this blog for more than a couple of weeks knows that the subject of Net Promoter benchmarking gets me fired up.
In talking to clients and prospects the question of “what’s a good Net Promoter score” almost invariably arises. Many times I have had to choose my words carefully when I tell people don’t waste your time on external Net Promoter® benchmarks.
I’ve also been careful to explain that not everyone agrees with my views on this topic.
One of the people who disagrees with me is Rob Markey (Bain Partner and co-author of The Ultimate Question 2.0). Clearly he knows something about the subject.
Well, recently when chatting to Rob for one of his Net Promoter System podcast interviews he took me to task on my anti-benchmarking views and, surprisingly, we came away in a violent agreement.
He outlined the specific scenarios where Net Promoter benchmarking is useful and I agreed with every one of his points.
When It Doesn’t Work
Right up front we both agree that simply comparing your score to another external score is a waste of time.
The number of factors that can skew the data collection process is large. Simply comparing your score to another company’s score or some third party benchmark is meaningless.
Even worse than a third party published benchmark, is one published on your competitor’s website or in their press releases. By using the right tricks you can rig the feedback and pretty much get any score you want. So without details of the process used, these vanity scores are not worth the paper on which they are written.
Then, even if the data collection process does make them comparable, a simplistic score comparison contributes nothing to improving business value:
If you’re ahead of them are you going to stop driving change? No.
If you’re behind them are you going to stop driving change? No.
If the information drives no change in what you will do it is worthless.
When It Can Work
On the other hand, Rob pointed out some ways that it can be useful, but only if you meet some specific conditions.
1. Collect Valid Data
You need to start by collecting a valid multi-company data sample. The process should be done externally and in a blind manner so that the response is un-skewed by information about who commissioned the research.
Also you need to collect information not just from your customers but also your competitor’s customers.
Lastly, the sample needs to be large enough and properly balanced to reduce, again, as much skewing as possible.
As you can see this is not a trivial exercise in itself.
2. Analyse the Data for Drivers
So the NPS® is interesting but not that useful. To make it useful you need to go the next step in the analysis process and get a good understanding of the drivers of your score and your competitor’s score.
With this information you can start to ask some really useful questions:
What makes a competitor’s customer a Promoter or Detractor?
How is that different to what makes your customer a Promoter or Detractor?
How can you leverage that information to create a competitive edge for your business?
You can see that we are now way beyond simply comparing scores. We are digging into the information in much the same way that you should be analysing your internal scores. Except that you are now looking at similarities and differences with your competitors.
It is the light and shade that you can use to differentiate your business.
3. Determine Economic Value
In my opinion (and a few others) one of the key success factors for any Net Promoter (or other customer satisfaction style process) is that you must be able to link the NPS to economic outcomes. This is no different.
Simplistically you must be able to say 1 point of NPS is worth $x of company revenue.
If you can’t provide that data then you will be unable to fund business cases on the insights you gather form the Net Promoter process.
So We Agree on All Counts
But two things are clear from this discussion:
- Simplistic score benchmarking produces no value
- You can drive substantial value from the benchmarking but you must be prepared to invest significantly in data collection and analysis to extract that value.
If you’re hoping that a quick score comparisons against some published benchmark will add value to your business or the Net Promoter process then that hope is in vain.
Save your time and invest it in understanding what is driving your score then make changes to your business to lift customer loyalty.
