Net Promoter Score Measures Success but Glosses Over Key Details

Written by on February 15, 2013 in BillingViews, Opinion with 0 Comments

There appears to be a new favorite metric among corner office CSP execs – Net Promoter Score (NPS). NPS aims to measure the willingness among a company’s customers to recommend its products and services to others. Traditionally, Telcos have focused on measures like churn rate and customer satisfaction. NPS is a level up from these metrics; a Telco can figure that if a customer is willing to recommend its services, that customer must be satisfied, unlikely to churn, and a good candidate to spend more. If a Telco can improve NPS, it is doing a better job of caring for and serving customers which in turn should deliver greater profitability. That said, NPS is just a metric. It can’t tell executives anything about why a range of efforts are either succeeding or failing to improve the numbers; which efforts are worth further investment; and whether efforts that are worth pursuing are being executed effectively. Talking to customers can shed some light there, so that’s what Amdocs and Coleman Parkes have done.

MBA Black Magic
Leave it to folks with Ivy league business degrees to come up with a “killer metric” that does a wonderful job of glossing over operational details and cuts right the chase; there’s nothing better than an existing customer that does your selling for you. The more you have, the better you’re doing. And, what better way to get all of your minions to march to your drum beat than to bonus them all against a common and interdependent metric. This is bean counter heaven; the most exciting widget to add to a boardroom dashboard since APPU (average profit per user). According to Amdocs customer management division’s Yossi Zohar, across various industries a four point improvement in NPS has been shown to increase revenue by 1 percent.

So the big question is, what can Telcos do to move the NPS needle in a positive direction? All sorts of things impact NPS’ underlying contributors, from network quality and billing accuracy to in-store slip ups and device malfunctions. Some of these things Telcos just can’t control. Others they can control, but only some are influential enough to be worthy of attention and investment.

Mobile Self-Care
One thing NPS proponents within CSPs probably know is that the industry’s NPS score is atrocious. “CSPs…are only at 22 percent,” Amdocs’ Yossi Zohar says. This means that only about 22 percent of CSP customers are willing to go to bat for their providers, which also means 78 percent are not. Leaders in other industries, like Apple (here we go again…an Apple comparison), score in the 70s. Zohar says he knows of at least one major Telco that only has an 8 percent score. So improvements have to be made.

Zohar and Amdocs argue that one way to improve NPS is to give customers things they like which work and also make them feel kind of special. Empirical data has an amazing ability to convert this kind of conventional wisdom into fact. Data from the recent survey Amdocs conducted with research firm Coleman Parkes confirms that 83 percent of consumers from across the globe would recommend their communications service providers to others if they just offered mobile self-service experiences that were consistent and easy-to-use.

Here’s the thing – most Telcos do offer some kind of mobile self-service. Chances are, when they rolled it out they weren’t thinking, “this ought to confuse and irritate our customers.” One way or another though, the solutions aren’t working. 76 percent of the respondents said they’d rather use a mobile self-service app than call a contact center. 83 percent said that if their providers gave them mobile self-service tools that were consistent and easy-to-use (i.e. actually work well), they’d probably recommend their providers to others. The problem is, 78 percent of those surveyed who have used their operators’ mobile self-service apps said, in so many words, they stink.

Personal Failure
This came as no surprise to Zohar; what was surprising, he says, is the data shows that while “CSPs are investing in personalization…customers don’t think they’re getting personalization.” 65 percent of the respondents said that their service provider “does not know them;” that’s either mud in Big Data’s eye or a business case for better analytics. Zohar follows, however, with an excellent point – “personalization is needed on the care side and not on the sell side.” Turns out, as we’ve been saying here at BillingViews, no one really likes to be upsold.

That said, even when upsales are effective at encouraging purchases, the purchasing process is bad. 72 percent of the respondents said they’ve tried to purchase something from their provider online, but half of them abandoned the process because it was “too complicated.” Worse, when providers try to deliver personalized care, such as through proactive notifications, almost three-quarters of respondents (73 percent) say they aren’t useful. That’s a shame, because 83 percent of the respondents said they’d skip the call center and “follow proactive notification instructions” to solve their own problems, but obviously only if they know the process would work.

Back to NPS
So, here’s the thing. NPS is an intriguing metric because if it actually works, it’s really a holistic sort of way to measure how well a CSP is treating and serving its customers. We pundits have been calling on CSPs for many years to serve customers better; the fact that they now may be measuring themselves on their ability to do so is encouraging. But if we fall in love with this high level metric, let’s not forget that details matter. Amdocs’ and Coleman Parkes’ survey does a good job of showing us that just investing in things like personalization and mobile self-care isn’t enough. These things have to be designed, implemented, managed, and promoted correctly. So, if the NPS needle doesn’t move, the folks upstairs in the expensive suits can’t simply fault the strategy or tactics. They have to engage with the operational teams and understand whether and why initiatives like personalization, mobile self-care, and proactive notification are not delivering the intended effect. In this complex business, there’s no way to get around the nuances. As a colleague recently quipped, “it is very easy to make difficult solutions, but very difficult to make easy ones.”

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About the Author

About the Author: Ed Finegold is CSO for Validas, a company that specializes in personalized user experiences that leverage analytics-as-a-service to simplify mobile buying, selling, pricing & billing. Ed has been a regular contributor to BillingViews. .

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