Fifty shades of the NPS part 2: Inner and outter loops, benefits and criticism
Part two of an article on the Net Promoter Score. Last week we focused on the origins and workings, and this time we will focus on the two mechanisms at work within this metric — Inner and Outer loops (I will use these terms interchangeably) and the pros and cons of using this metric. Enjoy your reading!
If you haven’t read the first part about the origins and workings of the NPS, here is the link.
As you know from the previous article, NPS is a metric for measuring customer satisfaction and loyalty. However, the metric needs to suggest how we can increase satisfaction levels. To do this, we can use two mechanisms that form a closed whole together with the survey.
The first is the Inner Loop. It allows us to explore in-depth feedback directly. Once the survey results have been collected, the team can analyse the responses and decide what action needs to be taken to address the users’ concerns. I wrote users, but remember that the NPS can be used to analyse different interactions, so it will work equally well for a company’s interactions with its users or to see how the team works internally.
The inner loop is about taking immediate action to address individual customer concerns and improve their experience by, for example, addressing specific complaints, providing support or discussing changes to a product or service.
Any feedback from a user who is at risk (e.g. stops using our services or, in the case of an employee, leaves the company), has a problem that needs to be addressed or provides precious feedback should end with direct contact for discussion. This is known as closing the loop. You can read more about the inner loop here.
The purpose of the outer loop is to make the feedback from our employees or customers reach the decision-makers who can make changes to transform our company.
Within the inner loop, some of the feedback will not be able to be addressed directly by the CS team. There needs to be a mechanism to pass all such topics on to a team that can initiate company-wide change. In this way, frontline employees feel supported by the rest of the organisation, processes change to be more client-centric, and company leaders can allocate resources where they will deliver the best from a client and employee perspective. It is good practice to appoint a Customer Advocate with a team (Customer Advocacy Office, short CAO) to collect feedback from different parts of the organisation and address it to specific internal actions. To close the loop in this case, the CAO should inform the customer and employees how the feedback will be addressed and what action will be taken. A more detailed description of how this mechanism works, along with a video, can be found here
NPS advantages and criticisms
One of the essential advantages of the NPS is its ease of implementation. The survey question is easy to understand, and the result is easy to calculate. This makes it the preferred choice for companies of all sizes, as it can be easily incorporated into existing customer feedback programmes. Another advantage of NPS is that it provides beneficial customer loyalty and support information. A high NPS score reveals that many customers are satisfied with a product or service and are likely to recommend it to others. It can be a dynamic marketing tool, as word-of-mouth recommendations are often more influential.
The use of NPS can be beneficial in identifying areas where a company can improve its product or service. People who are unhappy with a product or service are known as critics, and their feedback can be beneficial in identifying what needs to change. I have written about this in a previous article, but I find it particularly relevant to product development. By using NPS, we can verify even individual steps in the process and thus have a good idea of whether users are using the tools we have given them or whether there is a problem. You can use the NPS from the prototyping stage to gather initial feedback from internal testers.
Despite its many advantages, NPS has been criticised for its simplicity and failure to provide complete feedback on customer satisfaction. For example, a customer may give a high rating in an NPS survey but still have complaints or problems with the product or service. Additionally, the NPS does not offer details on improving customer satisfaction; it simply provides a score. The inner and outer loop helps to address this, but we still need to guarantee that we will get a response from the customer. Another criticism is that the NPS only measures the likelihood of a customer promoting a product or service rather than their actual behaviour. A customer may give a high survey rating but still not recommend it to others.
The Final Word
In summary, NPS is a popular and straightforward method of measuring customer satisfaction and loyalty. It provides valuable insight into customer loyalty and advocacy and can be used to identify areas where a company can improve its products or services. However, it also has its limitations and should be used with other methods to get a complete picture of customer satisfaction.
I hope both articles have given you a much better understanding of what NPS is, how it works, and its advantages. Do you use NPS in your teams? Is it for collecting information from customers or within your teams? Let me know in the comments!