Just how awesome is Net Promoter

Any product that gets the evangelical reaction that Net Promoter Score or NPS does, immediately raises my skeptical hackles even before I take a good look at it. Chokey the Chimp smells marketing hype from miles downwind.

NPS makes the claims that

Net Promoter is ...the worldwide standard for organizations to measure, understand, and improve their customer experience... It has gained popularity thanks to its ... linkage to profitable growth

Although that is a softening of earlier claims, those claims can still be found in a whitepaper that refers to

the ground-breaking research by Satmetrix and Fred Reichheld, founder of the Loyalty practice at Bain & Company, that has positioned Net Promoter as today’s standard for measuring customer loyalty. The research identified the most effective metric for accurately measuring customer loyalty and linked that metric to long-term financial growth.

Chokey the Chimp says that is a crap factoid.

In 2007 the Journal of Marketing published an academic research paper which asserted

Managers have widely embraced and adopted the Net Promoter metric, which noted loyalty consultant Frederick Reichheld advocates as the single most reliable indicator of firm growth compared with other loyalty metrics, such as customer satisfaction and retention. Recently, however, there has been considerable debate about whether this metric is truly superior. This article (1) employs longitudinal data from 21 firms and 15,500-plus interviews from the Norwegian Customer Satisfaction Barometer to replicate the analyses used in Net Promoter research and (2) compares Reichheld and colleagues' findings with the American Customer Satisfaction Index. Using industries Reichheld cites as exemplars of Net Promoter, the research fails to replicate his assertions regarding the “clear superiority” of Net Promoter compared with other measures in those industries.

And in 2008 Quality Progress magazine said

Net promoter score (NPS) developers say the “recommend” question is the best predictor of business growth. This conclusion has come under recent attack from other researchers who have found that the “satisfaction” and “purchase same” questions are just
as good as the “recommend” question in predicting business growth. The current factor-analytic findings cast additional doubt on the conclusions by the NPS camp. The “recommend”
question appears to measure the same underlying construct as the other two loyalty questions.
There is no scientifi c evidence the “recommend” question is, or should be, a better predictor of business growth compared to other loyalty questions. The NPS developers support the use of a single question to understand customer loyalty. Current study findings don’t support this single-item approach. There is nothing unique and special about the “recommend” question. Furthermore, single-item measures are less reliable (contain more measurement error) than multiple-item measures.

In summary, NPS is hype-driven. It's no better than any other metric. There is no magic. Sure happy customers tend to lead to financial success. Sure you can measure that with NPS. Or other metrics. Whatever.

By all means use NPS. Just don't fall for the hype, don't think that it has any mystical advantage over other measures of customer satisfaction. In fact there may be better measures. NPS comes in for methodological criticism as well.

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