At CustomerGauge, we preach setting targets for metrics like NPS, response rate, close-loop KPIs, etc. As goal-setting is a very widespread practice across many industries, I thought I’d dive a little into my previous life as a teacher and talk about what the world of education calls “SMART” goals.
So how do you know if the targets you are setting are smart ones? Luckily, that’s where the acronym comes into play.
How Do You Set NPS Targets?
Make them SMART. A target should be specific, for example company-wide and by division, with response rate and close-loop targets alongside NPS; measurable, which NPS, response rates and close-loop KPIs are by nature; achievable with the resources you have; realistic, since the article notes that even the most impressive programs typically see no more than a 10 to 15 point NPS increase in a year; and time-bound, with a deadline that also helps set how high the goal should be.
CustomerGauge recommends setting targets for metrics like NPS, response rate and close-loop KPIs, the article says, and SMART targets create the framework for evaluating a program's success.
- Set targets for NPS, response rates and close-loop KPIs, and make each one SMART: specific, measurable, achievable, realistic and time-bound.
- Be specific: set a company-wide target and decide whether each division aims for the same score or a higher or lower one, so it is clear later whether each target was met.
- Make targets achievable with the resources you have: if you plan to close the loop with detractors, make sure a team has the bandwidth to do it.
- Be realistic: the article treats more than a 10 to 15 point NPS gain in a year as an anomaly, even for the most impressive programs, and says a 5-point gain should still count as a noteworthy achievement.
- Give every target a deadline: a 30-point NPS gain may be unrealistic in one year but makes more sense as a 3 to 5 year target.
S = Specific
Let’s say you want your NPS score to be 50. OK, but try to be a little more specific. Is your company-wide target 50? What about division by division? Should all divisions aim for 50, or will the target be higher or lower for certain departments? Will you also have response rate and close-loop KPI targets as well? (you should!)
Be as specific as possible when creating targets to avoid any grey areas – especially when it comes time to determine if you have met them or not!
M = Measurable
This is the easiest of all the SMART parameters when it comes to your NPS program. NPS by nature is measurable. So are response rates and close-loop KPIs. If you are setting targets around any of these metrics, they should by default be measurable. If they’re not, take a step back because something’s probably not right!
A = Achievable
You should avoid setting targets that would be physically impossible to reach, like an NPS of 110. In seriousness, do make sure you set a target that you truly believe can be reached, and that you have the resources to physically achieve. You don’t want your team feeling like they were set up to fail.
Do also make sure you have the resources available to make your targets achievable. If you plan on closing the loop with detractors and firefighting, ensure you have a team with the bandwidth to perform those activities. Otherwise, you may have a hard time improving your NPS score.
R = Realistic
If your NPS score last year was a 12, it would be slightly unrealistic to set a goal of 50 for this year. Even the most impressive NPS score programs typically don’t see more than a 10-15 point increase over the course of a year; anything more than that is an anomaly.
Improving your NPS score by 5 points over a year, or even less, especially if you send a large number of surveys, should still be considered a noteworthy achievement. So be realistic with the targets you set. Remember that NPS scores can only range from -100 to 100, and it is rare to be on the far end of either spectrum. There are a limited amount of scores you can improve to, so don’t be expecting to gain 30+ NPS points in just 1 year!
T = Time-Bound
It may seem obvious, but a target is relatively pointless if it’s not time-bound by a deadline. Otherwise, you’d always be able to say, “Sure, I’ll hit my NPS target of 50…eventually.”
Your targets need to be time-bound, not only to hold yourselves accountable, but also because as mentioned above in “Realistic,” they help determine how high you should set your goal. Do you plan on hitting your target in the next quarter? Within the next 6 months? By the end of the year?
A 30-point NPS gain might be unrealistic as a 1-year target, but for a 3-5 year target, now it makes more sense. Making your targets time-bound is the last step in ensuring that you have set SMART targets for your organization.
In Closing
By setting SMART targets in your organization for NPS, response rates, etc., you are creating the framework for which you can evaluating the success of your program. You are also encouraging the active improvement of your Customer Retention program, which in turn, sets the pathway for driving internal improvement throughout your entire organization. So be the maker of change, and set (and track) those targets!
Set SMART Targets for Your NPS Program
Response rate and close-loop KPI targets belong alongside your NPS target. A short demo shows how CustomerGauge works.
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