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For years, telcos have mainly relied upon Net Promoter Score (NPS) to measure overall customer loyalty and satisfaction. However, it is more realistic to view it as an acquisition metric.
July 10, 2017
Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this Janne Ohtonen, Director of CEM at Openet takes a look at the use of Net Promoter score in telecoms industry decision making.
Telecoms service providers have long struggled to deliver customer experience (CEX) at levels as high as or higher than other industries. While most operators understand the importance of measuring customer satisfaction, few successfully do it. For years, telcos have mainly relied upon Net Promoter Score (NPS) to measure overall customer loyalty and satisfaction. However, it is more realistic to view it as an acquisition metric.
While this may have served as an adequate method of measurement for many companies, as more customer data becomes available, the ability to gather information about how customers are feeling, and identify exactly where experience pain points are located within operators’ networks and operations is proving crucial for the future telco’s CEX journey.
With the pressure on for operators to boost the way they engage with customers and improve the way they make them feel, the question is: is NPS enough?
NPS for the win?
NPS was introduced in 2003 by Frederick Reicheld as a customer loyalty metric and alternative to traditional customer satisfaction research surveys. NPS is calculated based on responses to the single question “How likely is it that you would recommend [brand] to a friend or colleague?” Responses are scored on a 0-10 scale, whereby the lowest scorers are categorised as ‘detractors’ and the highest are ‘promoters’.
Over the years NPS has come to be favoured by operators for several reasons. First, as one of the most widely known and used customer acquisition metric, operators have used it to acquire new customers. The higher the operator’s NPS, the easier it is for them to attract new customers through recommendations.
Second, operators have also come to use NPS as a tool for customer retention. By finding out which subscribers are giving low scores and solving their issues in a timely manner, operators will form a better relationship with their customers. After all, an operator capable of building a relationship based on trust is one that will be able to retain a greater number of customers.
Third, given NPS’ nature as a widely accepted metric and a single question, it is relatively easy to implement into company KPIs as it is generally understood by senior leadership and is unlikely to be received with hostility. In a legacy industry like telecoms, implementing non-disruptive methods of measurement certainly has its advantages.
Not always what it seems
But while NPS has its benefits, it also comes with several cons. Its ease of use means that operators rarely broaden their horizons to look beyond NPS towards other customer metrics. In many cases, they don’t even properly understand the NPS score itself. This has led to operators making inadequate claims about what NPS can actually measure and the insight that can be drawn from its results. For example, while a good NPS may imply that a customer is more likely to recommend a business, it doesn’t mean that a subscriber won’t churn, nor does it guarantee a renewal of contract. Unfortunately, operators often make the mistake of assuming the former will ring true of the latter.
Another NPS pitfall lies in the fact that it does not give context-specific insight and recommendations – the feedback provided by NPS metrics does not take into account an individual’s need at a certain moment in time. As a result, the NPS feedback operators receive is often very generic and unrepresentative of variables – i.e. time, location, existing relationship between operator and customer, etc. If an individual is asked to provide NPS feedback when he or she is frustrated with the operator, the NPS is likely to be reflective of this. Similarly, if an individual has just had a positive experience with the operator, this will reflect positively on their NPS. NPS will therefore never be an accurate reflection of a customer’s true feelings towards a brand beyond the moment during which the question was asked.
What’s more, NPS surveys rarely give an overall view of a telco’s customer base; they are usually answered by customers extremely satisfied with their service and therefore willing to provide positive feedback or those extremely dissatisfied and wanting to air their grievances. As a result, a middle ground rarely exists. Indeed, NPS works for service providers hoping to identify and fix issues affecting their business on a more general scale. As NPS aggregates all customer feedback to provide an average score, telcos wanting an individual view of the customer will find NPS unfit for purpose.
In addition to this, service providers hoping to use NPS to compare and benchmark their services against that of competitors will find this difficult. With every company using different scales, questions and settings to measure NPS, it is almost impossible to realistically and faithfully assess how well a company is performing compared to its competitors. Standardisation of benchmarking is necessary if all service providers are to use a singular metric to rate their customers’ experience and for it to be equally meaningful to industry bodies, customers, potential customers and the competition.
If operators are to see a significant improvement in the way they approach customer experience – one that brings increased business value by reducing churn, increasing customer acquisition and enhancing customer operations, they must look at different ways of obtaining customer feedback.
Understanding emotions is an important part of understanding the customer – by asking open-ended questions which guide the customer to provide responses evoking positive or negative feelings – for example: “How does your operator make you feel?” – the operator will have a greater chance of understanding the kind of sentiments and feelings the customer holds towards their brand. This method is also useful when assessing how trustworthy a brand is to its customers – if subscribers do not feel they can trust their operator, their loyalty will be low and thus their readiness to churn greater. The text analytics and Artificial Intelligence tools available today make asking these open-ended much easier.
Using other metrics is also important. For example, Customer Effort Score (CES) can be combined with NPS surveys and measures effort behind transactional activity through easy questions answered on a “Strongly Disagree”/”Strongly Agree” ranking. The logic lies in the belief that by reducing customer effort spent on an interaction, customer satisfaction will increase. The Customer Satisfaction Score (CSAT) is another traditional metric that can be used to measure individuals’ satisfaction with a product or service touchpoint.
Proof in the data pudding
A combination of metrics alone isn’t enough, however. From these different methods and metrics, a significant amount of data will be produced. Operators should therefore analyse the feedback and ask questions based on this feedback to improve on existing processes. It’s also important that analysis not be the beginning of operators’ customer experience journey; they should go beyond this to act on the data insight they have. It’s often the case that operators are data rich and sometimes insight rich but fail to act on the knowledge they possess to improve their subscribers’ experience. Changing this mind-set will be key to seeing a boost in overall customer experience.
Making a change
Operators have no easy task at hand. They have long been and continue to be the poor customer experience kings – we know it and they do, too. But as we become more and more reliant on our service providers for an increasing number of services, both inside and out of home, the opportunity for telcos to create “wilful customer lock-in” is huge.
If operators can look beyond NPS as the standard for measuring customer satisfaction and loyalty and towards other metrics for a balanced view, and harness the data produced from customer feedback, they will see an increase in their ability to solve customer issues in real-time, and thus an increase in overall CEX results.
Dr Janne Ohtonen joined Openet in early 2017 and currently serves as Director of Customer Experience Management (CEM). Before joining Openet, Dr Ohtonen held a number of senior Customer Experience and Engagement management and consulting positions within travel, retail and consulting industries. He has worked with companies such as Apple, Avios, British Airways, British Telecom, and Satmetrix. Dr Ohtonen is a published author and acknowledged thought leader in Customer Experience and Engagement areas.
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