What is Net Promoter Score (NPS?)
Net Promoter Score (NPS) was introduced by Fred Reichheld, a fellow at Bain & Company, in his 2003 Harvard Business Review article titled "The One Number You Need to Grow."
This metric operates around one central question: "How likely are you to recommend my company to your friends and colleagues?" Customers are prompted to respond on a scale of 0 to 10, with those scoring 9-10 categorized as promoters, 7-8 as passives, and 0-6 as detractors. The concept behind this simple yet powerful tool was to correlate the likelihood of customer recommendations with company growth. The final NPS score is derived by subtracting the percentage of detractors from the percentage of promoters.
Over time, NPS has been widely adopted across industries as a standard for measuring and improving customer loyalty.
Pros of NPS
Simplicity: NPS offers a straightforward metric that many companies use, enabling easy comparisons.
Universal Recognition: As a widely-adopted standard, it's understood across industries and markets.
Cons of NPS
Self-Centered Questioning: The core NPS question can be perceived as self-serving, potentially annoying customers who care more about their needs than promoting a business.
Low Response Rate: Industry average response rates for NPS range between 1-4%, limiting the data's reliability.
Inaccurate or Misleading Results: Scores can be influenced by factors like mood or timing, making them less dependable or less relevant if asked to the wrong person or without context.
Lack of Actionable Insights: Without contextual information, the reasons behind a score remain obscure, hindering effective responses.
Not Suited for B2B: NPS often falls short in predicting customer churn within B2B markets, lacking the depth needed to assess complex relationships.
What is Customer Perceived Value (CPV)?
Customer Perceived Value (CPV), pioneered by the founders of TheySaid, who were early employees of the globally recognized human insight platform, UserTesting, offers an innovative approach to gauge the value that customers discern from a business. With over a decade of experience collaborating with Fortune 100 companies on user research, these visionaries developed CPV as an alternative to conventional metrics like NPS. Their methodology was based on insights gathered from extensive interviews with 500 customer leaders, providing a deep understanding of the strengths and limitations of traditional models.
CPV operates on a five-point scale and takes into account four key pillars: Problem, Product, People, and Price. The default weightage assigned to these pillars is: Problem at 45%, Product at 25%, Pricing at 20%, and People at 10%. However, companies have the flexibility to adjust these weightings to suit their specific business needs and customer dynamics. This multi-faceted approach ensures a comprehensive assessment of the customer experience, moving beyond mere satisfaction metrics to capture a genuine understanding of perceived value.
Benefits Customer Perceived Value (CPV)
Focus on Value: CPV measures customer perception of value across various dimensions, enabling a more comprehensive understanding.
Higher and More Detailed Response Rates: With 40x higher response rates than industry standards and an average of 34% of responses providing detailed Go-To-Market intelligence, CPV offers richer insights and a more nuanced understanding of customer behavior.
Automatic, Continuous Qualitative Insights at Scale: CPV employs a unique approach called Pulses, sending timely check-ins to decision-makers at crucial touch points in their journey. These real-time insights provide a continuous feedback loop, ensuring immediate and relevant customer data is gathered efficiently and automatically.
Integrated with CRMs and CSPs: Seamless integration with platforms like Salesforce and HubSpot allows easy access to rich insights.
Actionable Insights: CPV's continuous feedback loop uncovers meaningful insights that can be applied to various functions, including Sales, Marketing, and Customer Success.
Tailored to B2B: CPV is designed for today's B2B market, providing insights that align with the unique dynamics of business-to-business relationships.
Value vs. Promotion
Both NPS and CPV offer distinct approaches to understanding customers. While NPS presents a simple and universal method, its relevance, particularly in B2B, might be waning. CPV's focus on perceived value, actionable insights, and compatibility with the B2B environment may offer a compelling alternative.
1. Discovering the Real Value vs. Passive Sentiment
NPS focuses on a customer's likelihood to recommend, often resulting in passive insights that lack actionable data. In contrast, CPV prioritizes understanding the real value perceived by customers. By assessing critical pillars like Problem, Product, People, and Price, CPV provides a comprehensive view of why customers choose to grow with or leave a business. This approach ensures actionable insights that are tailored to drive growth, retention, and win more deals.
2. Continuous Insight Gathering with CPV
While NPS often relies on sporadic surveys, CPV embraces a continuous feedback loop. The CPV Engine "pulses" customers throughout their lifecycle, capturing real-time insights. This proactive methodology means you're always informed and ready to respond to emerging opportunities or threats, unlike the often reactive nature of NPS.
3. Seamless Integration and Instant Insights with CPV
NPS might require manual efforts or additional tools to generate insights. CPV integrates seamlessly with popular CRMs and CSPs like Salesforce, HubSpot, and Gainsight, unlocking a wealth of customer-driven insights within days. With CPV, actionable insights are just a click away.
4. Actionable Insights Tailored to Organizational Needs
CPV's emphasis on tailored conversations ensures that insights are relevant to Sales, Marketing, and Customer Success teams. This contrasts with NPS, which primarily benefits CS and may not provide actionable intelligence for the entire organization. CPV's multifaceted approach leads to richer understanding and insights that are aligned with overall business goals.
5. A Unifying Voice for the Whole Organization
NPS often operates in silos, providing limited insights to specific departments. CPV acts as a common source of voice of the customer, fostering collaboration across Sales, Marketing, and Customer Success. CPV breaks down barriers, ensuring that the entire organization operates on unified, trusted, and actionable insights.