I was recently asked the question about how do you prove that measuring NPS is worthwhile (or any other loyalty metric). It was an interesting and good question but it is sort of like asking how do I prove that love is better than not having love. I know, I know… an odd example perhaps but also ephemeral to prove or disprove. Here is what I think about that (NPS not love – I’ll save that for another post):
Customer loyalty (or even the power of recommendation) itself is not what needs to be proven, we know it exists and operate on it many times when we make purchasing descisions, whether they are business or personal choices. What needs to be proven is how you can use measuring customer loyalty to actually drive positive change that not only results in growing your business but also in an improved customer experience. This actually comes down to the ability to monetize the value of score because money really does talk in this case. You have to be able to link the lifetime value, likelihood to recommend, frequency of recommendations and repurchase together to build a financial and customer focused picture of how your customers behave and what engages their loyal behavior. It can be done and I have done it, so I know it works. The interesting thing to me is how many times companies don’t take it this extra step, which enables you to make actionable business cases for change that benefits both customers and the business. Food for thought…
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