[Case Study] A CFO’s Perspective: The correlation between NPS and Growth

Ask an NPS software vendor what a point of NPS is worth and you’ll get industry case studies.

loyalty leaders grow more than twice as fast as the rest of their field, or a ten-point lift is worth 3.2% more upsell, etc.

Ask an academic and you’ll get a research paper.

A 2023 Marketing Science Institute working paper, The Net Promoter Score (NPS) Fails to Predict Revenue Growth, tested the original NPS methodology against several proposed fixes, across survey data from more than 30 US companies, and found no support for the claim that NPS predicts future revenue growth at all.

Jon James, CFO and COO at Wolters Kluwer Asia Pacific, did not want third party opinions or vague research. He wanted to know if his CX investments would have a positive ROI.

So he set his CX lead, Janine Scott, the brief to show him the link between what the business was spending on the programme and the P&L, using their own numbers.

In this video, Wolters Kluwer Asia Pacific staff, including the CFO/COO, discuss the links they have uncovered between Net Promoter Score data and key business metrics.

Video Case Study

Here’s How Wolters Kluwer Connected NPS and Business Value

The CFO Asked for the Number First

Jon did not approve budget for a new survey and wait for a dashboard of pretty charts. He set the brief right up front: show me the line from NPS to P&L.

Ask for the number at the start, so you instrument for it as you’re building the programme.

If you’re assembling that case yourself, build it on your own promoters, your own retention rate and your own cost to serve, not on an industry average.

Retention Was the Bridge to Revenue

Janine did not try to correlate NPS with revenue directly. She went via retention.

That is the right instinct in a subscription business, because higher retention is where the revenue lives. It was also a number the business already tracked, already trusted and already argued about in management meetings.

But retention is not the only available bridge. Promoter versus detractor revenue, retention rates by segment, or NPS mapped against revenue region by region are all workable routes.

Pick the commercial metric your business already manages. A connection to a number nobody owns means nothing.

The Renewal Cycle Sets the Measurement Window

If your customers renew once a year, an improvement in NPS this quarter cannot show up in revenue this quarter. It shows up at the next renewal.

Wolters Kluwer had to wait that long before the correlation became visible.

So when a board asks for proof of return at the next quarterly review, the honest answer is that the window is wrong, not that the link is missing. That is general to any customer investment: the spend lands before the return, so ROI needs a bounding time period.

Understand your measurement window before you start measuring.

Two Operating Changes Moved the Score: Focus on Change Not the NPS Number

They changed how they sold, and that had the single biggest impact on both NPS and retention.

Then they carved out a Customer Experience function and pulled the customer-facing teams, support included, into it.

Both are operating-model changes. The survey only told them where to apply the fix.

What CX owns, and what it leaves with the operating departments, decides how that looks in each organisation.

The Analysis Needs Finance Credibility Not CX Feel Good

If you are planning this work, resource it as a project with a finance partner in the room.

This is not a task to just add to the CX manager’s list. It needs the credibility that only comes when you have finance domain expertise sign off.

The Evidence Is What Kept the Programme Funded

The correlation did not just satisfy a curiosity. It became the reason the business kept investing.

That is the practical argument for doing this work early rather than when someone demands it. A programme that can show its own return stops having to re-argue for its existence every year.

They Already Believed It: The Data Made It Investment Grade

Jon James was not surprised by the finding. Nobody who has run a customer programme would be.

The value of the analysis was confirmation of business value generated.

Belief does not survive a budget meeting.

Evidence does.

Full Transcript

Janine Scott (Wolters Kluwer Asia Pacific)

So I was tasked with making the commercial connection between our Net Promoter Score and some of our measures around profitability and revenue. One of those is retention. So I went about looking at the data over a period. We have a renewal business, a subscription business, so we wouldn’t get to see the impact of any incremental improvement in NPS until our customers came up to renew the following year. So it was difficult because it had quite a long tail before we were able to prove that there was a correlation. Then we modelled the data.

We modelled the rising improvement in the retention score and the benefits that we had financially from that as an organisation against the rising NPS score and the initiatives that we drove out of that NPS data and were able to make a significant correlation between the two. So there was a sales model change. So we looked at our sales model, we looked at how we were delivering customer experience to the customer and we made a change in the sales model and that’s had the biggest impact that we see today in both the NPS score and also the retention rate.

We made a second organisational change and that was to carve out a function which we call the Customer Experience function and it was bringing together the other customer-facing teams like the support teams and driving some best practice improvements in how they were servicing the clients.

Jon James (CFO and COO Wolters Kluwer Asia Pacific)

When I put Janine into the role of customer experience, I actually set her with a challenge. And I said to her, look, we’re investing a lot of money into the Net Promoter Score programme, and I would like to be able to see the relationship between what we’re investing in the programme, the feedback we’re getting from customers, and how that actually comes back into a P&L outcome. And I’m really glad to be able to say that after a few months of looking at the data and going backwards and forwards, we eventually did start to find there was a correlation. It was a long-term correlation, but there was certainly a correlation between increasing feedback from customers and increasing scores and financial growth.

And that was a really key observation from our perspective because we were able to analytically show to the business that by improving the customer experience and getting our sales teams and our customer service teams focused on the customer experience, it actually, surprise, drove incremental revenues. And that’s been a great observation and it’s probably been one of the biggest drivers of further momentum into the programme because we know we can actually get a real financial benefit out of it.

And the whole business collaborates and centres themselves around this notion of customer experience and driving an improved customer experience. And I think once you start that snowball where people are thinking customer first and foremost, then you really start to drive a culture of customer experience and I think that’s what we’ve done quite successfully.

I think the whole link between customers having a good experience with you, not just on a one-off basis, but on a continual basis, there’s no question about it, that delivers value for the business. And I don’t think it’s a surprise to do that. But it’s really good that we’ve got the empirical evidence to actually show the link between that. And that’s probably where we sort of didn’t have the data to show that previously.

Next Steps

We run the same kind of direct executive conversation for clients who want that evidence built from their own data, not borrowed from someone else’s industry. If you want your own numbers instead of a case study value, book a meeting and we will talk through what that would take for your business.