Latest / The Marketing Funnel Podcast with Fexingo: Awareness, Interest, Decision, and Action Stages / How NPS Scores Can Kill Your Marketing Funnel
Transcript
- Lucas: So, Net Promoter Score. NPS. It's everywhere. You finish a call with your bank, buy a pair of shoes online, check out of a hotel — and there it is: 'How likely are you to recommend us to a friend or colleague?' Zero to ten. Luna: And if you're like me, you've probably skipped it more times than you've filled it in. Lucas: Exactly. And that's actually one of the problems. But today I want to talk about why NPS can be actively dangerous for your marketing funnel — not just unhelpful, but genuinely misleading. And I want to anchor this in a specific example. Luna: Which one? Lucas: Tesla. I know, I know, Tesla is a lightning rod. But the data here is fascinating. For years, Tesla has posted some of the highest NPS scores in the auto industry — often in the high 80s or even 90s. By comparison, the average auto brand sits around 40 to 50. Luna: Right. So on the surface, that suggests Tesla owners are evangelical. They're out there convincing friends to buy. Lucas: Exactly. And that's the promise of NPS: high score equals organic word of mouth, which feeds the top of your funnel for free. But here's the thing — Tesla also has some of the highest churn rates in the industry when customers go to buy their next car. Luna: Wait, so people say they'd recommend Tesla, but then they don't buy another one themselves? Lucas: Precisely. That disconnect is the NPS trap. You have promoters who are enthusiastic about the product conceptually, but when it's time to open their wallet again, they defect. Maybe it's service experience, maybe it's the charging network, maybe they just want something different. But the NPS score gave you a false signal that your funnel was healthy at every stage. Luna: So the top of the funnel looks great — lots of referrals and buzz — but the bottom is leaking. Lucas: Yes. And if you're a marketing leader who's bonus is tied to NPS, you might optimize for that one number, push initiatives that boost the score, and completely miss that your retention is falling apart. The funnel has a hole, but you're looking at the wrong dashboard. Luna: Let's talk about why NPS is so seductive. I think part of it is that it's simple. One question, one number, easy to benchmark. Lucas: Absolutely. Fred Reichheld, who created NPS back in 2003, argued that it correlates with growth. And for some companies, it does. But the correlation is weaker than most people think. A 2016 study of over 100,000 consumers found that NPS explained only about 12 percent of variance in actual referral behavior. Luna: So 88 percent of referral behavior is driven by other factors. Lucas: Exactly. And those factors — convenience, price, habit — might not show up in a single survey question. The other issue is response bias. People who have extreme experiences — very good or very bad — are more likely to respond. The middle just skips it. Luna: Which means your NPS might be a self-selected sample of enthusiasts and haters, not an accurate picture of your customer base. Lucas: Right. And if you're a B2B company with a small number of high-value accounts, one disgruntled customer can tank your score and trigger a panic. Or conversely, if you have a viral product that people love to talk about, you can get a sky-high NPS while your actual retention is mediocre. Luna: So what should marketers use instead? Lucas: I think the smart approach is to use NPS as one signal among many, and to pair it with behavioral data. Specifically, look at actual repeat purchase rates, churn rates, and customer lifetime value. Those are harder to game and they tell you what people actually do, not what they say they'll do. Luna: There's also a metric called the 'Customer Effort Score' — which measures how easy it is to do business with you. Some research suggests that's a better predictor of retention than NPS, especially for service interactions. Lucas: Good point. And there's also the 'Net Emotional Value' score from some more recent frameworks. But I think the real lesson here is about the funnel itself. NPS is essentially a top of funnel metric — it measures willingness to refer, which feeds awareness and interest. But it tells you almost nothing about the decision and action stages — whether people actually convert again. Luna: So a company that optimizes solely for NPS might end up with a funnel that's wide at the top but shallow at the bottom. Lots of buzz, but not enough retention to justify the acquisition cost. Lucas: Exactly. And we've seen that happen. I think of a company like Uber in its early days. Incredibly high NPS because the service was novel and exciting. But once competition came in and the novelty wore off, churn spiked. The NPS was a lagging indicator of enthusiasm, not a leading indicator of loyalty. Luna: And Uber's marketing funnel had to shift from growth at all costs to retention and loyalty. Lucas: Precisely. So if you're a marketer listening, my advice is: don't abandon NPS, but don't worship it. Look at the split between promoters who are active repeat buyers versus promoters who are one-time evangelists. If your NPS is high but your repeat rate is low, you have a disconnect. And that disconnect is where the funnel is broken. Luna: One more thing that I think is worth mentioning: survey fatigue. If you're asking for NPS after every single interaction, you're annoying your customers. And that can actually lower your score because people get frustrated. Lucas: Big problem. I've seen companies that send an NPS survey after a customer service call, and then another after a billing interaction, and then another after a product update. By the third one, the customer is already a detractor just because of the barrage of surveys. Luna: So you're measuring your survey process, not your customer experience. Lucas: Exactly. And that's a classic case of the metric becoming the target. The goal should be to understand the customer journey, not to hit a number. Luna: Before we wrap, I want to touch on something that's relevant here. A couple of listeners have written in saying they find these deep dives on marketing metrics really useful for their day jobs. And honestly, that's what keeps this show going. Lucas: Yeah, it means a lot. And if you've gotten value from episodes like this one — or any of the previous 35 — a small contribution makes a real difference. We keep the show ad-free, and listener support is what makes that possible. It's buy me a coffee dot com slash fexingo. Even a couple of dollars helps. Luna: Yeah, genuinely. It keeps us independent and lets us dig into topics like this without worrying about sponsorship constraints. Lucas: Absolutely. So, back to the funnel: I think the key takeaway is that NPS is a useful diagnostic, but it's not a strategy. Use it to identify segments that need attention, but don't let it drive your entire marketing operation. Pair it with behavioral metrics, and always ask: 'What is this number actually telling me about the funnel stage I'm trying to improve?' Luna: And if your promoters aren't buying again, you've got a problem that NPS alone won't solve. Lucas: Right. Next episode, I want to dig into a specific company that completely rethought its funnel by moving away from NPS toward customer effort and lifetime value. Hint: it's a subscription brand you probably use. Luna: Looking forward to it. For now, thanks for listening.