What Your Net Promoter Score Isn't Telling You
By Tema Frank, CEO, Frank Reactions
Do you remember when you were learning to drive a car? How hard it was to concentrate on all the things you had to pay attention to at once: the speedometer, rearview mirrors, side mirrors, street signs, the cars around you, pedestrians? Throw in some rain or snow and you had moving wipers for distraction too. Then you wanted to add in some music on the radio, or, more recently, check your phone (tsk, tsk). It's overwhelming!
That same level of overwhelm is why the simple Net Promoter Score (NPS) caught on like wildfire when Fred Reichheld introduced it in 2003. He said it was the only number you'd need for your company to grow. Imagine if driving a car could be boiled down to just looking at one thing! So much easier!
The NPS, for those who aren't familiar with it, is the one-question survey you so often get asked when you've just bought something, or called customer support. It asks, on a score of 0 to 10, how likely are you to recommend our company to a friend or colleague. People giving scores of 9 or 10 are considered "promoters," 7 or 8 are neutral, and anyone giving a score below 7 is considered a "detractor." To get your NPS you simply calculate the percentage of respondents in each category, subtract the detractors from the promoters, and, voila, you've got your NPS.
We all know that executives love metrics, so of course they are tempted to rely on NPS. They measure how their company performs against others (if they can get the competition's NPS scores) and how theirs changes over time. These can be helpful tracking numbers, but they are certainly not "the only number you'll need." Fred Reichheld himself has now acknowledged that there were problems with the statistical methods used in his original work.
There are three big problems with NPS:
- It misses the "why."
- What people say and what they do can be quite different.
- It ignores that we don't consider vendors in isolation.
Why Don't You Love Me?
As many a heart-broken lover knows, when somebody's breaking up with you they won't usually give you a list of things to fix to win them back. Love is an emotion, and so logic isn't all there is to it. Luckily, while hoteliers whose guests have had bad experiences still have to overcome those negative emotions, it is a lot easier than putting a marriage back together. Often there are very clear things that your hotel did wrong in the customers' minds, and fixing them can get you back in their good books.
Unfortunately, the NPS doesn't tell you why they feel the way they do. So at a minimum, if you are going to use NPS, be sure you couple the question with an open-ended one asking them why they gave the rating they did. Then be sure to pay at least as much (if not more) attention to that than you do to the overall score itself. If you fix the problems, the score will go up as a result.
Sure I'd Recommend You. (Or would I?)
Most people probably mean it when they say they'd be likely to recommend you to a friend or colleague. But what are the odds they have a friend or colleague looking for a hotel like yours in the near future? We are all busy people, so by the time a friend actually asks for a recommendation, they've probably forgotten all about you. Or they can't remember your hotel's name. Or they don't recommend you because, even though they loved staying there, they think it would be too expensive for their friend, or not suitable for a family.
In a survey of 16,600 customers of a telecom firm and a financial services firm, there was a huge gap between what people said they would recommend and what they actually did. In the case of the telecom, 81% said they'd recommend it but only 30% ever did. In the financial institution's case, 68% said they'd recommend it and only 33% actually did. And even when they did make a recommendation, only 12 - 14% of those referrals actually became customers, and fewer still were profitable customers (8% for the telecom and 11% for the financial company).
I Love All My Children Equally! (Or do I?)
Do you have a favorite clothing store? Do you buy all your clothes there? Or do you usually end up checking out the selection at a few places? Same goes with hotels. Yes, there are some people who stay loyal to one chain, and never stay elsewhere when they travel, but there's a reason why most people have loyalty cards from more than one chain. Research by shows that if you're a promoter for a brand, there's an 80 percent chance you promote competing brands too. Sometimes another hotel is more convenient. Or they've got a special deal on that makes them more appealing for that particular trip. Or, although you like them both, you especially like the pillows at one chain more than another.
What matters most in terms of your company's growth potential, says Tim Keiningham, author of The Wallet Allocation Rule: Winning the Battle for Share, is not your absolute NPS, but how your brand ranks relative to a customer's rankings of other brands. That will affect how often customers buy from one rather than another. If I have three hotel chains that all get a 10 from me when I'm asked if I'd recommend them to a friend, how will I decide which one to stay at if they are all available when I'm going on a trip? Other things being equal, the relative ranking will decide which one I choose. (The one with the pillows I like more.) And since other things rarely are equal, people have to rank yours even higher if it is to overcome a barrier like price or convenience on a particular trip.
By now most of us have had the experience of some poor clerk begging us to rate them a 10 when the follow-up survey comes, because they'll get penalized for anything less. Personally, I don't give a 10 unless something was truly over-the-top outstanding. And remember that the NPS is about the brand experience, not about a particular clerk. Front line staff only influence a small part of the overall customer experience. If they have to deny my request for a refund because of official policy, of course I'm not going to give a 10, no matter how nice they were. It's not about them. It's about the policy.
Likewise, I can be perfectly happy with the clerk but not feel that the overall customer experience was so memorable that I'd be telling my friends about it. Let's say I booked the hotel with no problem, got checked in efficiently when I arrived, the rooms were clean and comfortable, and the front desk staff were polite - even friendly. To me, that's an 8 or 9. A 10 might be for the hotel that, knowing I'd be arriving really late, had a fruit and cheese basket waiting in my room. Or that recognized I'd stayed there before, welcomed me back with a friendly, personal comment, and remembered that I'm allergic to feather-filled pillows.
It's also important to remember that there's a point of diminishing returns. Once you've got an NPS of 90, will struggling to get it to 92 really make a big difference? Probably not. At that point, it may make more sense to be working on broader strategic issues, or on improving efficiency so you can lower costs while still keeping your high NPS.
Also, remember that your NPS does not include measurements from former customers who were so dissatisfied they've left you. They are no longer getting your NPS surveys. So your NPS may even have increased but your company could still be in big trouble.
When you've got a low NPS - even a negative one - sometimes an important survival strategy is to work harder with the handful of promoters you do have to get them bringing in more people like themselves rather than just focusing on the overall NPS. If your hotel has a bad reputation, nothing your ads a say is going to convince a prospect you're great. But what if a friend the prospect respects says, "Yeah, I know they've got a bad reputation, but I've stayed there and for what you're looking for right now they'd be perfect." That has a much better chance of leading to a booking. It can help you keep your cash flow going, and may even help you find a whole new target market. It could be that what you offer is fine, but you've been trying to sell it to the wrong people. Maybe you want the folks who are looking for fast food instead of a gourmet dining experience. Either can be a profitable strategy, as long as you are targeting the right people and giving them what they want.
Your NPS score is sort of like your weight on a scale. It gives you an idea of whether or not you need to lose weight, but doesn't tell you how, nor how attractive or healthy you are. Focus on what leads to your goal, not on the number itself.
Tema Frank, Chief Instigator at customer experience consultancy Frank Reactions,, has been pioneering online success for hotels and other businesses since 2001. She has over 30 years’ experience in marketing, customer service, user experience testing and business strategy. Her clients have ranged from small B&Bs in France to large organizations like Expedia, Travel Alberta, Sabre Holdings, Cruise Ship Centres and the Alberta Motor Association. She speaks at conferences internationally, and has taught Digital Marketing at the University of Alberta, at the Université de Pau et des Pays de l’Adour in France, Grant MacEwan University, and in short courses for companies and government departments. Ms. Frank can be contacted at 1-866-544-9262 or firstname.lastname@example.org Please visit http://www.FrankReactions.com for more information. Extended Bio...
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