Is NPS Still The Chief Indicator Of Customer Sentiment?

By
Shreesha Ramdas, Strikedeck

NPS And
Its Relevance

Today’s retail world is beset with massive
change, and standard sales principles are constantly under challenge. At the
same time, the notion of customer loyalty has never been more important.
According to the Wharton School’s Marketing
Metrics, the probability of selling to an existing customer is 14X more
than attracting a new one. Additionally, according to the SDL Global CX Wake Up Call report, 73% of
consumers satisfied by the customer experience will recommend a brand to
others. Knowing where a retailer stands with its customers has never been more
important.

For years, the chief metric of customer
sentiment, other than revenue and sales data, has been Net Promoter Score
(NPS). It stands to reason — what better test of customer satisfaction is there
than whether they recommend the retailer to another?

Where
NPS Falters

While there is tremendous value in this
metric, it suffers from two major problems.

1. The first is that it tends to be a trailing indicator. Changes in NPS happen after an experience occurs, and have likely set in for some time. This is also true for revenue and sales data. At this point, the damage is already done and may even be irreparable.
2. A second issue with NPS is that it is rather one-dimensional. Nothing about the metric shows what or why a customer feels a certain way or how something has changed. Uncovering what is really going on may be difficult and might take time, and trying to fix it may be impossible after a certain amount
       of time has elapsed.

A
Better Solution? Real-Time Interaction!

Businesses today continue to be characterized
by real-time interaction. Chatbots try to instantly engage online customers and
potential customers the moment they hit a retailer’s web site. Apps provide the
means to extend a retailer’s presence and services, while social media activity
aims to build conversations and spread influence. Understanding customers in
real time enables retailers to shape the customer experience as and when it
happens. Retailers can make adjustments in the way they do business to improve
experiences for other customers.

Real-time customer data must be multi-sourced
and should be the total of all interactions and conversations with employees
that are captured as notes. It should include email and other forms of input
and communications, such as surveys and mini-surveys, research, follow-up
reports, web site activity and more.

The next task is bringing this data together,
analyzing it and turning it into actionable insights. The idea is to gain a
360° picture of customers with deeper levels of insight. What follows is the
ability to interpret it and develop a roadmap. Oftentimes, this means finding
meaningful patterns and trends. Of course, information without action is
futile! Let real-time information direct decisions and prompt actions to
address specific customers, as well as the way the retailer conducts business.

NPS is still meaningful, but it is far from
real-time, and it lacks context and dimension. Retailers can improve customer
loyalty and retention and expand revenue by gaining a realistic understanding
of customers. Based on this, they can better cater to customers and provide improved
experiences, while it is still possible to make a difference.

Shreesha Ramdas is the CEO and Co-Founder of Strikedeck.
Previously, Ramdas was the GM of the Marketing Cloud at CallidusCloud, Co-Founder
at LeadFormix (acquired by CallidusCloud) and OuterJoin, and General Manager at
Yodlee. Prior to that, he led teams in sales and marketing at
Catalytic Software, MW2 Consulting, and Tata.  Ramdas advises several
startups on marketing & growth hacking. You can find him on
Twitter, @Shreesha.