#1 – NPS is a Lagging Indicator

Net Promoter Score (NPS) is a lagging indicator, meaning it measures customer satisfaction after the fact. This can be a problem because it doesn't allow you to make changes to prevent customers from becoming detractors in the first place. For example, if you receive a low NPS score, it could be months or even years before you're able to identify the root cause of the problem and take action to address it.

By the time you've identified the problem and taken action, you may have already lost a significant number of customers. This is especially true in today's digital age, where customers have more choices than ever before and can easily switch to a competitor.

#2 – NPS is Not Actionable

Even if you're able to identify the root cause of a low NPS score, NPS itself doesn't provide any guidance on how to fix the problem. This is because NPS is a measure of customer satisfaction, not a measure of customer loyalty.

Customer satisfaction is important, but it's not the same as customer loyalty. A customer can be satisfied with your product or service, but that doesn't mean they're loyal to your brand. In fact, a customer can be satisfied with your product or service and still switch to a competitor if they find a better deal.

#3 – NPS is Biased

NPS is biased towards promoters. This is because promoters are more likely to respond to surveys than detractors. This means that NPS scores are often inflated, which can lead to a false sense of security.

For example, a company with an NPS score of 50 might think that they're doing a great job, when in reality they may have a significant number of detractors who are simply not responding to surveys.

#4 – NPS is Not Predictive

NPS is not predictive of future customer behavior. This is because NPS is a measure of customer satisfaction, not a measure of customer loyalty. As we discussed earlier, customer satisfaction is not the same as customer loyalty.

A customer can be satisfied with your product or service, but that doesn't mean they're loyal to your brand. In fact, a customer can be satisfied with your product or service and still switch to a competitor if they find a better deal.

#5 – NPS is Expensive

NPS surveys can be expensive to administer. This is because they require a significant amount of time and resources to design, implement, and analyze. In addition, NPS surveys can be difficult to get customers to respond to. This means that you may need to send multiple surveys to get a representative sample of your customer base.

Conclusion

NPS is a flawed metric that can lead to a false sense of security. It's not actionable, it's biased, it's not predictive, and it's expensive. If you're serious about measuring customer loyalty, you should use a different metric, such as Customer Lifetime Value (CLTV).

FAQs

1. What is NPS?

NPS stands for Net Promoter Score. It is a measure of customer satisfaction that is calculated by subtracting the percentage of customers who are detractors from the percentage of customers who are promoters.

2. Why is NPS bad?

NPS is bad because it is a lagging indicator, it is not actionable, it is biased, it is not predictive, and it is expensive.

3. What should I use instead of NPS?

There are a number of different metrics that you can use to measure customer loyalty, such as Customer Lifetime Value (CLTV), Customer Retention Rate (CRR), and Repeat Purchase Rate (RPR).

4. How can I improve my CLTV?

There are a number of things you can do to improve your CLTV, such as providing excellent customer service, offering loyalty programs, and personalizing your marketing messages.

5. How can I increase my CRR?

There are a number of things you can do to increase your CRR, such as reducing customer churn, increasing customer satisfaction, and building customer loyalty.