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Cigna announced in February that it would tie high-level executive compensation to net promoter scores as part of a larger strategy to improve customer experience. The measurement will affect the C-suite as well as bonuses for thousands of other executives.
Cigna is in good company. Half of CX leaders say their firms pay employees for hitting NPS targets, according to Forrester research.
Companies commonly view a connection between compensation and net promoter scores as a way to ensure executives take customer experience mandates seriously. However, experts question whether tying a CX metric to pay is the right way to make experience central to a company’s culture.
“I think that's a fundamentally flawed idea that will destroy the business in 95% of the cases — unless it's only senior executives and it's tied to relative performance,” Fred Reichheld, Bain & Company fellow and the creator of NPS, told CX Dive.
The net promoter score is based around one question: How likely is it that you would recommend a company, service or product to a friend or colleague? Companies ask respondents to rate their response on a scale ranging from zero, for not at all likely, to 10, for extremely likely. The final score is calculated by subtracting the percentage of detractors — those who respond with a six or less — from the percentage of promoters — those who respond with a nine or 10.
NPS is designed to be part of a learning system focused on improving customer outcomes, according to Maureen Burns, partner at Bain & Co. Putting the focus on compensation at the expense of creating a culture around learning and improvement can limit the metric’s potential.
Companies that want to make NPS part of their compensation should take a cautious approach, experts said. Tying up a customer satisfaction metric with monetary incentives runs the risk of warping how the business handles customer insights and can even influence how customers respond to surveys.
How impacting compensation can affect objectivity
Perhaps the biggest potential pitfall of tying a metric like NPS is that it can alter how the people measuring the number approach their duties. When NPS is tied to compensation, the metric often becomes warped, according to Mark Lipton, professor emeritus of management at The New School and Parsons School of Design.
“Whenever something is going to impact my compensation, my odds of a promotion or my very stability in keeping my job here, I am going to be driven to see how I can influence those numbers,” Lipton told CX Dive.