Net Promoter Score Abuse—and how to prevent it
One of the benefits of working with great clients in great businesses is the occasional opportunity to stay in great places. This week past was no exception.
Boston is one of my favourite cities in the USA; the density of teaching establishments, the sprouting of new money, the foundation of old money, the legacy of European immigration and the energy of the recent Hispanic influx provides the City with a culture which challenges the brain and tingles the tongue. Only New York can compete.
Boston beats New York
But Boston does beat New York in its choice of airport hotels, and my bedroom view provides proof. I had a view of Boston Harbour and I breakfasted enveloped in the tang of salt air—and the airport terminals a 5 minute shuttle ride away.
The benefits of the location don’t end there. A 10 minute ride by water taxi takes you to Little Italy in the North End, and 10 minute walk on the harbour front path leads to some of outstanding Latino restaurants in East Boston.
In most other respects, the hotel is reasonable but not outstanding. It is the location that makes it worthy of recommendation. For me at least.
After checking out I received a link to an online survey in which I was asked to rate my hotel experience, and I was inadvertently provided with an excellent example of a rapidly spreading, menacing disorder—NPSA (Net Promoter Score Abuse.)
Value creation requires insight, value capture requires courage
I had just completed a workshop entitled, “Value Creation, Value Capture,” in which I cover the various approaches to developing offers that are better and different than the competition. And then, once value is created, how to do price appropriately to capture a portion of that value.
I find a lot of organisations are reasonably good at testing new offers in the market, but fail short in valuing it and capturing it.
Value capture requires testing the upper limits of pricing, and probing the boundary of these upper limits requires, inevitably, pricing to failure—safely. And while most companies understand the conceptual aspects of price elasticity, few actually have the courage (culture) to test the full range.
NPS and its link to price sensitivity
At the workshop, I introduced a method by which Net Promoter Score can act as a proxy for price elasticity. Broadly speaking, if your customers provide a score 1-6 in response to the products or service provided, you are likely to have limited price elasticity.
Conversely if your customers are ‘wowed’ by the experience they have with you, not only are they likely to recommend you to others, but they will be less price sensitive to your services—as will their ‘recommendees.’ In my experience, clients with Net Promoter Scores have the courage, culture and confidence to test their pricing.
The standard NPS tool is comprised of two parts. Part 1 asks the customer to indicate on a scale of 0-10 how likely they are to recommend the product or service to a friend, family member or colleague. Part 2 requires (my emphasis) to provide supporting evidence for the score, usually in the form of some narrative.
Why did you buy?
The narrative tells you why people buy; the score tells you how well you are doing it. The first is messy, loosely coherent, and often contradictory. It requires judgement to exploit and interpret its meaning. It is, though, actionable. The second part is easy to measure and rapidly digestible. It is also easy to massage and non-actionable.
Using the measure in the absence of the supporting narrative is akin to driving a car while only being able to use the rear view mirror. Casualties and expenses will mount as you randomly adjust the steering wheel in hopes making forward motion on your NPS.
Sales figures and NPS may record your success or failure, but they don’t reveal its source.
NPSA—and how to spot it
Which brings me to the Hyatt survey. As you can see they used Part 1 of the Net Promoter Score, the score. The survey then proceeds to ask for a rating of ‘hygiene’ factors (cleanliness of room, ease of check-in, friendless of website) and provided no opportunity to provide the story behind the score. Thus, they never knew
- my score of 9 was due to the proximity of salt water
- one participants score of 6 was due to the poor sound insulation between rooms (external noise was no problem)
- One participants score of 10 was due to the singer in the bar playing a request for his wife on her birthday
- One participants score was 5 because her room was not ready upon arrival after a long haul flight.
The group gave the hotel an NPS of 65%. This is healthy score but Hyatt group does not know why. They have the cost and overhead of the survey, but none of the insight.
End NPSA today
Don’t make the same mistake. Stop the spread of NPSA.
Any customer survey which doesn’t address the question, “why did you buy?” is flawed.