Since it was first published in the Harvard Business Review in 2003, Net Promoter Score (NPS) has been known as the one number every business needs to grow. Designed to discover whether customers would be willing to recommend your business to a friend, NPS indicates the growth of a business based on its customer loyalty.
But while it's an important gauge of company success, your Net Promoter Score is just one number. Can it really tell you everything you need to know about your business's future?
Limitations of NPS
While NPS does give a valuable snapshot of how much loyalty customers feel to a business, there are many things it can't capture.
"NPS is a fantastic quick metric you can use to gauge whether or not you are performing," said Alan Garcia, CEO and founder of Agreeable Research, a survey research platform. "But it doesn't tell you where to go."
While NPS tells you how customers feel about your business at a specific moment, it doesn't tell you why they feel that way or what needs to change in order for your business to grow.
The value of survey research
If you want to understand why customers feel the way they do about your business, the best thing you can do is ask them directly. This requires formal or informal survey research.
Agreeable Research provides businesses with its Networked Survey software, which allows promoters and detractors to see and rate each other's opinions. This gives businesses insight into strengths and weaknesses.
Which form of survey research you choose will vary depending on the size of your business and budget.
"There's a lot of anxiety in the research space about methodology," Garcia said.
But method isn't the most important thing to focus on. What matters is talking directly to your own customers and finding out their thoughts on your business specifically. The opinions they share will tell you exactly where your business is successful and where you might need to make changes.
"You don't want to invest in general insights," Garcia said. "You want to know who your exact customer base is. What are the things you need to do to optimize from where you are, not just general marketing trends that are divorced from your day-to-day?"
How should businesses use NPS?
Although NPS doesn't give you any insight into why customers feel the way they do, it's still valuable, said Garcia.
"It does measure customer loyalty, and … you can't manage what you don't measure," he said.
Garcia recommends that businesses use the insights from survey research to improve their business models. From there, you can gauge how successful the improvements are by the changes in your Net Promoter Score.
"One of the biggest points of confusion with NPS is that you don't want to say your one NPS number," said Garcia. "You want to see the change in that score over time."
Survey research tells you how to create loyal customers. How your NPS changes over time shows whether you are gaining or losing those loyal customers, which gives a clear picture of how your business is growing.
Knowing those two things, Garcia said, "will put you in the best possible position, regardless of what your NPS metric is day to day."