- Jun 07
- 4 min read
Driving NPS using Behavioural Economics
How do Cognitive Overload and Framing influence the Net Promoter Score?
Customer experience is the key differentiator in a landscape of ultra-connected users and over-saturated choice. The Net Promoter Score (NPS) has become the staple measurement of customer experience and as it turns out is dramatically impacted by behavioural economics (BE). From navigating complex customer journeys to consolidating crucial relationships with increasingly demanding customers, BE offers loyalty-building techniques to optimise NPS.
What is NPS?
NPS is a globally recognised measure of customer loyalty and satisfaction, coherently captured into a single-source metric. Importantly, NPS is not just another industry buzzword or inconsequential acronym but is regularly linked with business growth and subsequently a metric companies strive towards. Despite the all encompassing nature of customer service, NPS fundamentally boils down to whether customers will recommend your company to a friend. Customers are required to rate their recommendation from 0-10, separating customers into:
Promoters (ratings of 9-10)
Passives (ratings of 7-8)
Detractors (ratings of 0-6)
Promoters are the holy grail of customer experience, championing your company’s service and brand, activating potential customers. Marginal differences in NPS ratings are crucial to a company’s performance as high scores are linked to increased revenue, higher retention and strong customer advocacy. Given that such a powerful indicator of a company’s performance is placed in the hands of the customer, it is paramount that their needs are at the forefront of every interaction.
What are the C-factors that influence this process?
In an information-dense industry, a behavioural approach enables companies to transition to a more user-centric architecture. This behavioural approach draws on over 150 mental shortcuts, identifying important biases in customer decision-making, known as C-factors. Core ‘C-factors’ can be used to align interactions with a human-way of thinking, making interactions simple, rewarding and reassuring. Drawing from well-established knowledge about how our brains make decisions, cognitive biases can be used to fundamentally improve the customer experience. By removing isolating jargon and embedding behaviourally-informed language, companies are able to improve understanding, increase decision-making confidence and in turn impact NPS. Here are some key BE principles that impact NPS:
People prefer tasks that require less effort as too many options can cause customers to avoid decision-making for fear of not making the best choice (Iyenger & Lepper, 2000). So companies must consider the amount and type information presented to avoid overly technical information negatively impacting the overall experience. Grouping similar action points together increases processing fluency, ensuring the customer conversation requires minimal mental effort and flows in an optimal order (Alter et al., 2009). Specifically, chunking information into three manageable parts is a compelling tool to remove cognitive friction. This is key to create positive interaction impressions, converting your average customers to loyal advocates. Companies are able to instil confidence in a customer by distilling complex information into a digestible format, improving the overall quality of the interaction.
How options are presented significantly impacts our behaviours (Tversky & Kahneman, 1981). The ‘Peak-End’ heuristic (Kahneman et al., 1993) demonstrates that companies should always end interactions on a positive note, as the conclusion determines the positivity customers ascribe to the interaction. Also, customers care less about features than benefits, so in order to boost NPS companies should draw attention to how their service enhances a customer’s life rather than the specific attributes it offers. For example, drawing out how a service may save them time more effectively demonstrates value than underlining the latest available add-on.
Aegon Case Study:
Cowry were able to demonstrate the powerful impact of behavioural economics on NPS in a spearheading project with Aegon. Through rigorous testing, the ‘Better Conversations Programme’ transformed the emotional experience and connection for customers, increasing NPS by 22 points company-wide. The programme took a multi-level approach, replacing convoluted jargon with concise, personalised explanations and improving processing fluency. Efficient, directed communication improved the delivery of customer-centric outcomes in complex interactions. The fluency of customer conversation was further supported using encouragement and clear calls to action on digital platforms. Finally, the wider environment was re-engineered to facilitate employee well-being to better support a connected customer journey. As a result, the aggregated positive customer interactions unlocked significant gains in customer satisfaction, leading to record-breaking NPS scores.
The Team at Aegon improving NPS using Behavioural Economics.
Behavioural Economics should be an integral piece of a company’s toolkit where people increasingly expect the highest levels of customer service. By empowering customers through user-friendly conversations, companies can engage consumers with behaviourally-fluent solutions. If you don’t place a premium on NPS and customer satisfaction, your company’s product or service will quickly be left behind. Critically, the future belongs to customer experience and adopting a human-centric approach to drive NPS will not only lead to proven results but position the company at the forefront of an industry transformation.
Written by Ella Morrison
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