Net Promoter Score (NPS) continues to gain prevalence, with many companies believing it's the one number they need to grow. But, while NPS helps companies learn how likely customers are to recommend their products or services, this all-important metric fails to provide insight into why customers might praise or pan their offerings.
In its recent "Better Customer Experience Correlates to Higher Net Promoter Scores" report, Forrester explores how customer experience correlates to NPS across industries by examining company scores using Forrester's Customer Experience Index (CXi) as compared to the NPS ratings for the same companies. CXi extracts the insight necessary to understand the customer behavior that impacts NPS by breaking customer perceptions into three areas of analysis—meeting customer needs, ease, and enjoyability. The study, which focuses on various credit card and wireless service providers, highlights the direct benefits of using customer experience to improve NPS.
The following insights underscore why companies must look at the entire customer experience to improve their business and boost NPS:
- By integrating CXi scores, companies will come to understand to what extent customer experience impacts their NPS, driving action with respect to experience areas that need improvement. Isolating customer experience quality helps determine the root cause of business problems. For example, companies receiving high CXi scores, but low NPS can conclude that their issues are not customer experience-based.
- When determining customer experience impact, companies must focus on three areas of service: How enjoyable were they to do business with? How easy were they to do business with? How effective were they at meeting your needs?
- Ultimately, companies will want to build a predictive model that can anticipate how changes in customer experience will impact key business metrics, such as customer loyalty. To do so, many may need to create their own metrics for those who are deemed most valuable by some companies but may not be meaningful or actionable to others.
- Companies should incorporate behavioral metrics into the equation so they may learn what happened during an experience leading up to a particular CXi score and how that experience affected the customer's subsequent actions.
- If companies work backward from outcomes, they can develop a sense of what works and what doesn't. Such analysis will help them determine what aspects create detractors, ways to alleviate confusing or frustrating issues, and methods for boosting passive customers to powerful promoters.
Key takeaway: Because most companies have yet to embrace this correlation and integrate it as part of their customer experience strategies, these metrics currently stand to provide great competitive advantage. Companies that incorporate these metrics will be able to meet growing customer demands, thereby delivering on these expectations before the competition develops their own strategy. Companies that can show cause and effect by tying together three key business metrics—descriptive, perception, and outcome—will also generate buy-in from senior level executives, encouraging the business to spend wisely and invest in differentiation.