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NPS — Revisiting A Classic

NPS — Revisiting A Classic

RE-READING a classic text like “The One Number You Need to Grow” (Frederick Reichheld, Harvard Business Review Dec 2003), which birthed the Net Promoter Score system (N.P.S.), as I mentioned I'd been doing recently, really is a worthwhile exercise — in this case for at least two reasons:

1. Newly-achieved retro status: 2003 is just long enough in the past to begin to feel “dated”, which is another way of saying we can now begin to judge what the prevailing thinking of that era got right and what it didn’t.

2. A similar industry “moment”: the article also reflected a turning-point moment in marketing, when the winds shifted from “more-is-more” (providing customers more choices is a positive differentiator) to “more-is-less” (customers are overwhelmed with choice on all sides; provide them fewer, better choices instead).

Vintage Millennium

It's hard to believe the 2000’s are now retro-chic territory, but that’s the relentless fashion calendar for you. Along with clothing and music, management is no stranger to trends, fads and movements, and it can be fun to look back at the most recent wave with a critical eye — fun and just maybe useful training for helping out our era’s errors (ah, couldn't resist). For one:

For a while, it seemed as though information technology would provide a means to accurately measure loyalty… But the successes thus far have been limited to select industries, such as credit cards or grocery stores, where purchases are so frequent that changes in customer loyalty can be quickly spotted and acted on.

The mistake here was discounting medium-term (5-15 years out) technology too steeply. It should not have been hard to predict that before long customer loyalty would be measured in, if anything, too many ways by too many industries. Rather than relying on an internal survey function to measure it, the need would instead be for a filter to help choose which of 100 loyalty-metric(s) to pay attention to.

With the advent of e-mail and analytical software, leading-edge companies can now bypass the research firms entirely, cutting costs and improving the quality and timeliness of feedback.

Again, this presumes the superiority of a do-it-yourself research function within each company, which is belied by the historical trend in almost every sector towards increasing specialization, outsourcing, and commodification of functionality. For a while there was a time when every company was better off with its own datacenter, supercomputer or electric plant, but as they matured those capabilities became services.

Most customer satisfaction surveys aren’t very useful. They tend to be long and complicated, yielding low response rates and ambiguous implications that are difficult for operating managers to act on.... A customer feedback program should be viewed not as ‘market research’ but as an operating management tool.

The hallmark of a classic is not that it makes zero mistakes, but that it gets something important right. It’s just not always clear which is which at first. I submit the above distinction, between the “research program” model and the “feedback system” model of customer satisfaction — i.e., customer satisfaction/loyalty/sentiment is or should be something companies are routinely, operationally plugged-in to, on multiple channels, not a special quantity to be surveyed or program to be followed.

The industry is still a ways away from this, but I think we’ll know we’re close when Customer Experience or Market Research cease to be massive specialized departments, and are instead fully integrated into everyday ops, with an internal expert resource center as a vestigial remnant.

Next Verse, Same As The First?

One of the cool things about achieving vintage-retro status is being able to see where a trend fits in to the historical macro-cycles of its industry. Most industries have a back-and-forth pendulum swing between two extremes of something, whether it’s long vs. short in hair styles, emo vs. punk in music, primary vs. pastel in color design, or baroque vs. minimalist in architecture (or web design).

All these cycles tend to share the same basic valence — more is better <—> less is better — and that is what keeps things, over the long term, in some sort of balance. When we’ve run too far in one direction, enough people get fed up, bored or angry about it, and turn around the other way, that the group never goes entirely off a cliff.

N.P.S. was born at the end of a more-is-more era in marketing. Barry Schwartz’s The Paradox Of Choice: Why More Is Less was just about to come out, and was widely influential in turning media attention, and marketing, to the issue of consumer decision-paralysis (a first-world problem if ever there was one). Minimalist information design was trending, and Apple was moving from success to success with the iMac, iPod, and iPhone. The writing was on the wall for a turn towards simplification and minimization of cognitive effort (leading eventually to the likes of the Customer Effort Score.)

That was then. What about now? Can we locate what phase we’re in, circa 2020, on the mini-maxi spectrum? Probably not exactly, marketing and technology being as complex as they are; but does it feel more one or the other, and does there seem to be a strong counter-trend yet? Open questions.

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