If you run a business, I’m sure you measure lead indicators like customer-satisfaction, intention to repeat, net-promoter-scores and so on. A good question to ask when you are setting up these metrics is, are you measuring the right metric. To be clear, this is not one of those NPS-bashing articles - there’s enough criticism of every model including NPS but that’s a separate topic for another time. The question, for now, is whether measuring NPS adds value to your business - assuming the model delivers what it promises.
Well, it truly depends on what makes the business grow. If you are in an eCommerce-in-India situation now, measuring customer NPS is a great idea only if promotion or word-of-mouth is indeed the main source of new buyers. If more people are coming through SEO / SEM or the pull created by TVCs, one should measure those metrics instead. Measuring seller-NPS, though a common practice, is to my mind useless if not harmful, because if sellers start having a great sales or experiences on a platform, they don’t necessarily want more sellers to come and join the party. Most new sellers don’t come to a platform through recommendations from other sellers.
• Do you want to grow the business? Sometimes companies keep measuring NPS for categories in intentional decline. Needless to say, it’s a waste of resources.
• Does the business grow primarily through buyer-growth? If building repeats is the idea, just ask customers how likely they are to repeat. Do not ask them how likely they are to promote your brand to others. Wrong questions give you wrong answers.
• Do new buyers come primarily through recommendations? If your buyers are coming through search or ATL-awareness, then NPS isn’t your biggest worry.
• Are you looking to measure business health? Then you should ask more relevant pointed questions rather than an overall question.
• Is NPS valid for you? I mean, if you do believe customer growth is key for market-share growth, and also that new customers come through promotion by existing customers, do you see correlations in the past data of NPS and market-share? If you don’t - there’s a big problem. You need to check for correlations and causality with other metrics and see if you need to change your reasoning itself.
One final word of caution. NPS is indicative and directional. It is used only because it is a consistent and comparable way of looking at net promotion. For any real insight to come through, you will need to deep-dive into possible reasons for promotion, detraction or even staying passive. And then when you have these insights, you’ll have to close the loop through follow-up actions, the effectiveness of which can be measured through your next NPS survey. To cut it short, unless you have the intent, bandwidth and resources to do the deep-dives and follow-ups, measuring NPS in isolation will just tell you if you’re doing well or not, but not why or how to improve. And that, to my mind, is a complete waste.
