Is This the Beginning of the End for NPS?

It’s time for contact centers to stop chasing North Star metrics like NPS

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Is This the Beginning of the End for NPS?
Voice of the CustomerInsights

Published: July 24, 2023

Charlie Mitchell

As Goodhart’s Law states: “When a measure becomes a target, it ceases to be a good measure.”

Over the years, NPS has suffered this fate.

Why? Because the metric provoked a culture of hitting targets rather than fundamentally understanding what drives excellent customer experiences.

As a result, many businesses started to only survey happy customer cohorts and tweaked the conventional NPS question to twist their scores.

Such a phenomenon even gave rise to the term “watermelon metrics”. These show glossy green scores on the surface but dig below, and they’re red raw.

Recognizing this, the UK’s Competition and Markets Authority (CMA) and Financial Conduct Authority (FCA) started scoring the NPS of major banks independently in 2021.

The regulators then stipulated that all banks must publish their results, helping consumers see through the mist and uncover which British bank most customers actually recommend.

In doing so, the CMA and FCA forced a wedge between banks and NPS, pushing them to understand customer experiences at a much deeper level to truly move the needle.

These developments underline the need for customer experience measurements that better unpack customer perceptions, processes, and journeys.

Last month, Genesys took a step forward toward that.

A Potential Replacement for NPS?

In releasing The Experience Index, Genesys challenged conventional methods in how businesses monitor and measure customer experiences – including NPS.

The Index tracks customer and employee sentiment and combines that with industry data and benchmarks from the Genesys Cloud CX platform.

As a result, the CCaaS market leader aspires to spotlight insights into where an experience goes wrong and the possible fixes – rather than providing a measly score.

Rebecca Wetteman, CEO and Principal at Valoir, admires this approach. During an episode of CX Today’s BIG News Show, she stated:

Having the ability to see how the changes you make to experiences impact the business and customers – I think that is very powerful.

Liz Miller, VP & Principal Analyst at Constellation Research, also notes how such a system will support CX teams as they evolve their CX proposition.

“A lot of the metrics Genesys is focused on will inform the strategy of how businesses roll out systems and help them understand what they have already rolled out incorrectly,” she says.

“That addresses the big gap between this picture of Nirvana that vendors love to show us.”

Addressing this disparity is more critical than ever in the age of AI. After all, many brands apply AI to areas they already struggle with – pushing everything into automated workflows, so it’s bad faster.

Often, this leads to underwhelming results and the need for managers to massage their NPS scores.

Yet, with The Experience Index, businesses could avoid such sticky scenarios in the first instance – as Miller suggests.

“I think that Genesys is moving in a smart direction here,” she continues. “It’s about measuring, pinpointing, and identifying the things that are most important to the customer and employee, giving a wake-up call to the organization to say: the strategy might be wrong here.”

That is the biggest challenge of NPS. The problem isn’t asking someone: would you recommend us? It’s about putting the systems, processes, and programs in place and intentionally doing things to move it.

Indeed, The Experience Index will offer insight into how to move the score over time – taking CX measurement beyond benchmarking and toward a more tangible roadmap to enhance experiences.

The Future Role of NPS

While The Experience Index has many advantages, the NPS score has one significant upshot: everybody knows what an NPS score is.

Meanwhile, if a business were to advertise: “We’ve improved our Experience Index by…,” nobody would understand what that means.

Moreover, The Index is not vendor-agnostic. As such, it’s unlikely to ever have the same reach as NPS – lowering its effectiveness as a marketing tool.

Nonetheless, if other CX tech providers follow Genesys’s lead and become more crafty about customer experience measurement, the operational value of NPS could fade away.

That could become likely, as business leaders understand the dangers of chasing an NPS score as a North Star metric.

If more regulators take the lead of the CMA and FCA and don’t let organizations track NPS themselves – they could support that critical education process.

In addition, CX measurement and business-wide decision-making may gradually improve as watermelon NPS scores bite the dust.

Only trustworthy NPS scores will remain, which the best businesses in their sectors can deservingly flaunt and use to attract more customers.

 

 

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