Whenever someone asks me how fast improvements can be made in NPS performance, I point to the remarkable example of Charles Schwab, described in my previous blog. But Schwab’s extraordinary improvement wasn’t the end of the story—this is an ongoing saga. Today the company is confronting a challenge that others may be facing as well.
CEO Walt Bettinger told us at the Forrester Financial Services Conference that Schwab’s Net Promoter Score is the first thing he looks at when he comes to the office in the morning. The reason, he said, is that it provides such a clear picture of the health of the company’s business. But as the stock market began its recent precipitous drop, he noticed that Net Promoter scores were declining. It wasn’t because of anything under Schwab employees’ control—customers were understandably less happy with their broker when their asset values were shrinking. The same thing was going on at competitive firms. NPS was dropping throughout the industry, along with the market.
Bettinger and his team realized that the real objective for NPS is not an absolute score but a better score than the competition. And Schwab conducted periodic market surveys to determine the company’s relative NPS performance. But employees found their declining NPS demotivating, and managers had to work hard to put it in perspective. NPS for most firms declines in a recession, they pointed out. The important goal was to improve relative to competitors.
Even with this perspective, however, employees’ ability to evaluate NPS-oriented improvement initiatives was more difficult. The periodic industry surveys were not frequent enough for rapid learning, and were certainly not ideal for holding branch teams accountable. One obvious solution was to focus branches on their rankings relative to peer branches within the Schwab network. Absolute NPS might decline because of the recession, but a manager could still strive to be a top-quartile branch.
The non-branch portions of the organization also needed a timely metric, and Schwab discovered an excellent solution. Managers noticed that the average NPS of Schwab and key competitors correlated closely with movements in the S&P market index. So they now track their NPS progress relative to the market on a regular basis.
In recessions and times of market volatility, most companies will need to develop a proxy for competitor scores if possible. A stock market index may work in your industry. If not, search for a readily available economic statistic that seems to correlate with the average NPS for your industry over time. Then you can keep your employee teams focused not on the (sometimes) unavoidable declines in NPS but on the productive mission of improving NPS relative to the industry. By all means, continue to do periodic research to track relative scores versus competitors. But to maintain constant attention, rapid learning, and motivation, report NPS relative to the proxy that best captures industry NPS trends. This will let you focus on creating more promoters and fewer detractors, even through the difficult challenges of a recession.
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