The news: A consultant from Bain & Company first introduced the concept of the Net Promoter Score (NPS) in 2003 through a Harvard Business Review article. This year, Bain is collaborating on an update aimed at establishing a better set of standards for benchmarking excellence in the customer experience.

• Along with the marketing consultancy Kantar and the customer experience platform provider Qualtrics, Bain drafted the Global Customer Experience Standard.
• The three firms will collect feedback on their standards draft through August 31, and want to launch a final version on CX Day on October 1.

Why it matters: Like any consumer-facing organization, financial institutions (FIs) have sought to find “one number that rules them all” for customer satisfaction, or some way to aggregate data that ferrets out shortcomings and helps them improve.

• Much of the needed measurement for FIs now centers on the digital experience available through websites and mobile banking apps.
• FIs are seeking differentiation in an increasingly competitive market. Supplementing a traditional metric like NPS with a more holistic view like the Global Customer Experience Standard could help them elevate their customer experience.

What problem is it solving? NPS is a market research metric that gauges customer satisfaction and loyalty on a scale of 0-10 (sometimes condensed to 0-5) by asking one question: How likely are you to recommend a product, service, or company to others?

• NPS is simple to communicate to employees, provides an easy way to follow up with customers, and can be used to benchmark against rivals.
• Many FIs consider NPS an important metric in measuring their success and it’s widely embedded into many company operations. In 2020, a Forbes article estimated two-thirds of the Fortune 1000 used the NPS in some capacity.

But of late, NPS has been criticized as too volatile and inherently flawed, and called “a measurement of the past.” Studies have found it’s not very good at predicting customer behavior: Intention to refer doesn’t always result in a referral. As the Wall Street Journal reports:

• Two 2007 studies analyzing thousands of customer interviews said NPS doesn’t correlate with revenue or predict customer behavior any better than other survey-based metrics.
• A 2015 study examining data on 80,000 customers from hundreds of brands said the score doesn’t explain the way people allocate their money. When they changed their NPS, it had little relationship to how they divided their spending.

Reading the tea leaves three years ago, Gartner predicted that by 2025, more than 75% of organizations currently using NPS to measure customer service will abandon it due to the difficulty of deriving actionable insights from the data it gathers.

Behaviors offer a better metric: To supplement NPS, the Bain-Kantar-Qualtrics collaboration has created a standards framework for measuring customer centricity, focused on three areas:

• Customer-Centric Culture: The brand’s positioning aligns with the organization’s purpose and values. It uses metrics to track progress against targets. Its leaders regularly try to take on the perspective of their customers and employees. Systems are in place to regularly capture feedback and issues. Support and rewards for staff reflect the company’s values.
• Customer Experience Capability: The organization uses advanced analytics and AI to gather and connect together different sources of data and customer feedback, from transactional-level data to brand evaluation metrics. It makes these insights available across the organization. It bases its data management practices on a single customer view, linking customer experience to business value.
• Customer Experience Execution: The entire organization understands how investments in customer experience impact its brand and growth. It designs target journeys with users in mind, and organizes its teams around customer needs. It acknowledges the value of all customers and their potential for becoming brand advocates, and personalizes its customer interactions accordingly.

Our take: Survey fatigue is a real problem for participants. But asking a single question about whether they’ll refer something to a friend isn’t a solution anymore. Consumers conducting their lives online are being asked that one question repeatedly by multiple service providers every day. FIs seeking to compete with disruptive digital upstarts on their customer experience need more sophisticated diagnostics than NPS. A more complex model like the Gobal Customer Experience Standard or software solutions like customer journey analytics offer a much-needed alternative.

Editor's Note: An earlier version of this article stated that Bain-Kantar-Qualtrics is seeking to replace NPS. Bain says it views the new framework as supplementing NPS. In addition, the NPS scale begins at zero rather than one.