The Pros and Cons of NPS: Why is NPS Important?

The Net Promoter Score (NPS) is an essential metric to help you gauge customer satisfaction and get insights into your overall customer experience. It has plenty of benefits, such as ease of use, compatibility with other metrics, and the ability to be benchmarked. 

However, despite its widespread adoption, NPS has also been subject to criticism and debate. If you use it with its intended purpose in mind, it’ll transform your business, but there are many things it simply can’t do. 

In this blog post, we’ll explain why it’s important to measure NPS and examine the pros and cons of the metric so you can decide how to incorporate it into your business strategy. 

If you’d like to jump straight into measuring NPS, use the free template below: 

Why is NPS important? 

There are tons of reliable customer satisfaction and loyalty metrics. Yet, NPS has consistently been among the most popular ones since it was developed 20 years ago. As many as two-thirds of the Fortune 1000 use NPS to measure the quality of their customer experience. 

One of the key factors behind NPS’s meteoric rise is the fact that it can be used by companies of all sizes to deliver customer experiences that are not just acceptable or satisfactory but remarkable. 

NPS is also an extremely cost-effective way to make data-driven decisions, gather product feedback, and segment a customer base.

There is plenty of statistics on how NPS correlates with factors such as growth, revenue, and overall customer satisfaction.

Companies with the highest NPS scores were found to generate total shareholder returns 2-3x the market average. NPS Promoters are responsible for almost seven times as many positive referrals as Detractors, while Detractors generate over 80% of negative word of mouth.

These findings show that NPS is a fundamental metric to measure and analyze if you take customer satisfaction seriously and want to grow your business. 

However, before you get started, take a look at some of the most salient pros and cons of NPS so you can inform your strategy. 

The pros of NPS

NPS is easy to implement

The NPS survey consists of a single, universally understandable question that can be easily translated into any language without losing any of its meaning or nuance: 

"On a scale of 0-10, how likely is it that you would recommend our company/product/service to a friend or colleague?" 

Based on their score, customers are classified into three categories: Promoters, Passives, and Detractors. To calculate your NPS, simply subtract the percentage of Detractors from the percentage of Promoters. The result is a score ranging from -100 (all Detractors) to +100 (all Promoters).

The simplicity of this calculation makes it easy to understand and interpret, allowing organizations of any size to quickly gauge the overall customer sentiment and loyalty.

Implementing NPS requires minimal resources or investments, which is another reason for its popularity. You can easily integrate the NPS survey into your existing customer touchpoints, such as emails, websites, or mobile apps. This minimizes the need for additional infrastructure, software, or complex data analysis tools.

For customers, the single-question nature of NPS reduces survey fatigue, which means you’re more likely to get more responses and improve the quality of your data. 

NPS can be benchmarked

Since NPS is a widely adopted metric across various industries, it makes it easy to benchmark your performance against your competitors and track progress over time.

By analyzing your score against the industry standards, you can quickly identify areas where you excel or lag behind and make data-driven decisions to maintain or improve your competitive advantage.

NPS is easy to track and measure

The simplicity of NPS means it can be easily tracked and measured over time to provide you with reliable data on how your performance has fluctuated. 

By regularly monitoring your NPS, you can identify any shifts in customer sentiment, which will help you to proactively address any emerging issues before they escalate. 

You’ll also be able to uncover areas where your business might be underperforming, measure the impact of implemented improvements, and make data-driven decisions. 

NPS supports a customer-centric business culture 

Having a customer-centric business means putting customer needs and preferences first in every aspect of your company’s operations. 

NPS does a great job of providing you with targeted customer feedback that directly reflects your customer satisfaction and any problem areas. 

By digging into your NPS data, you can prioritize customer needs and expectations, which results in stronger customer relationships and long-term success.

The simplicity and adaptability of NPS also make it easy to track and measure customer satisfaction over time. A focus on continuous improvement will reinforce a customer-centric culture, as your employees will be encouraged to remain agile and responsive to customer needs and expectations.

NPS complements other metrics

While Net Promoter Score is a powerful metric in its own right, it can be even more effective when combined with other customer satisfaction and loyalty metrics.

By integrating NPS with metrics such as Customer Lifetime Value (CLV), Customer Effort Score (CES), and Customer Satisfaction Score (CSAT), you can gain a more comprehensive understanding of your customers and make more informed decisions about your marketing, sales, and customer service strategies.

Try this free CES survey template and gain more insight into your customer experience:

The cons of NPS

NPS can be oversimplified

One of the primary criticisms of the Net Promoter Score is that the metric oversimplifies customer satisfaction. By boiling down customer experience to a single number, it may overlook nuances and complexities that contribute to satisfaction or dissatisfaction.

This can lead to an incomplete understanding of the customer experience and may result in missed opportunities for improvement.

To avoid making this mistake, use other customer satisfaction metrics, such as Customer Acquisition Cost (CAC), Customer Satisfaction Score (CSAT), or Customer Effort Score (CES). 

To start measuring CSAT, simply use the template below:

NPS has a limited scope

Net Promoter Score focuses exclusively on the likelihood of customers recommending a product or service, which may not be representative of their overall satisfaction. It’s not a guarantee of an actual recommendation. 

Customers may have various reasons for not recommending your service or product, including suitability for specific use cases, even if they’re perfectly satisfied with it.

By focusing solely on the likelihood of recommendation, the NPS may fail to capture other nuanced yet essential aspects of the customer experience.

NPS might not address specific issues

No single metric can provide all the insights you need. While NPS is extremely helpful in offering a high-level view of customer satisfaction, it might not offer insights into specific issues that impact the customer experience.

Without additional context, it can be challenging to identify the root causes of customer dissatisfaction and develop targeted solutions.

Whenever you run your NPS survey, add a follow-up question to get the respondent to elaborate on their score. You can use the template below and customize it, for instance, by applying survey logic.

NPS might not reflect cultural differences

The NPS methodology may not account for cultural differences in the way people perceive and rate their experiences. 

For instance, some cultures may be more inclined to give extreme ratings (either positive or negative) or avoid giving low scores even if they are dissatisfied. 

Besides, people from different cultures may perceive the 0-10 rating scale differently. For example, in some cultures, a rating of 7 might be considered positive, while in others, it could be seen as neutral or even negative. 

These cultural variations can impact the interpretation of NPS scores and make cross-cultural comparisons challenging.

NPS results might be manipulated 

As with any performance metric, there is potential for companies to "game" the NPS system.

By focusing primarily on increasing their NPS score, businesses may overlook other important aspects of customer satisfaction or attempt to manipulate the results by selectively surveying customers or incentivizing positive responses.

They can, for instance, only send the survey to the customers they know are satisfied or display it at specific touchpoints.

Measure your NPS with Survicate 

NPS is an incredibly important metric to measure if you want to gain insight into your customer experience.

The easiest way to get started is by picking the right tool. With Survicate, setting up and sending your first NPS survey will take just minutes. You can also automate the entire process and integrate natively with your favorite third-party tools. 

Sign up for our 10-day free trial to start collecting NPS feedback today!