"Net Promoter Score" is a customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, and Satmetrix. It was introduced by Reichheld in his 2003 Harvard Business Review article "One Number You Need to Grow". (1)
Over the past few months I have seen an indiscriminate use of NPS surveys which fed my curiosity - is the NPS question always relevant? As a result, I went to the source, the original HBR article. (2)
Secondly, because of the overuse of the NPS many people are aware of the question and its implications. So I do feel that this is already a bias in the respondents. By the way, the question itself presupposes a positive response "How likely would you...". In addition to it, despite the fact that some may answer 9 or 10 - are they really recommending it to someone else? or just saying...
Thirdly, a NPS score based on one customer interaction or event is going beyond the original definition and demonstrated correlation. I'd argue that you need repeated events and a relationship to be truly loyal to a company or brand. But to an event or meeting? What a NPS of a meeting means anyways? The meeting is not happening again, so how can I recommend it to someone? How can I be loyal to a meeting or a IT support phone call? Even if I call my IT service and it went well, I can't say that based on this one call, I'd recommend the company to a friend. A true recommendation would come based on a long term relationship with a company. Those examples just show that the whole thing got out of hand.
Finally, NPS also ignores the power of the promoters or detractors. A famous blogger as detractor who will write a bad review is much more powerful than a silent person who rated 0. The same goes for promoters. So a positive and high NPS from a bunch of quiet people is much less powerful than if the NPS comes from vocal thought leaders.
In sum, please before assuming that NPS is the holy grail of market research, do some research yourself and understand your situation. When appropriate and relevant prepare a better survey or question. Propose a research that is thoughtful, and customized to your industry/company/situation.
(1) http://en.wikipedia.org/wiki/Net_Promoter
(2) http://hbr.org/2003/12/the-one-number-you-need-to-grow/ar/1
Over the past few months I have seen an indiscriminate use of NPS surveys which fed my curiosity - is the NPS question always relevant? As a result, I went to the source, the original HBR article. (2)
Very shortly, the concept is about a company profitable growth. Specifically, how survey answers on customer loyalty were correlated with growth. The concept can be extrapolated to a brand as well. That seems reasonable in many cases. But the paper concludes that "for most companies in most industries, getting customers enthusiastic enough to recommend a company appears to be crucial to growth."
To me, the first issue is that the paper is about "most" but not "all" industries. Therefore the environment of the company will play a role: regulated industries and/or with several key stakeholders making purchasing decisions will probably not have the same NPS and growth correlation found on the paper. For example, the original study was not done with the Pharma/Devices industry. So the correlation was not proven there. From the paper itself: "The “would recommend” question wasn’t the best predictor of growth in every case. In a few situations, it was simply irrelevant." Those include dominated by monopolies and near monopolies, or when decisions are taken by multiple stakeholders where one specific consumer type may have little choice. A scenario very likely for most companies in the healthcare industry.
Secondly, because of the overuse of the NPS many people are aware of the question and its implications. So I do feel that this is already a bias in the respondents. By the way, the question itself presupposes a positive response "How likely would you...". In addition to it, despite the fact that some may answer 9 or 10 - are they really recommending it to someone else? or just saying...
Thirdly, a NPS score based on one customer interaction or event is going beyond the original definition and demonstrated correlation. I'd argue that you need repeated events and a relationship to be truly loyal to a company or brand. But to an event or meeting? What a NPS of a meeting means anyways? The meeting is not happening again, so how can I recommend it to someone? How can I be loyal to a meeting or a IT support phone call? Even if I call my IT service and it went well, I can't say that based on this one call, I'd recommend the company to a friend. A true recommendation would come based on a long term relationship with a company. Those examples just show that the whole thing got out of hand.
Finally, NPS also ignores the power of the promoters or detractors. A famous blogger as detractor who will write a bad review is much more powerful than a silent person who rated 0. The same goes for promoters. So a positive and high NPS from a bunch of quiet people is much less powerful than if the NPS comes from vocal thought leaders.
In sum, please before assuming that NPS is the holy grail of market research, do some research yourself and understand your situation. When appropriate and relevant prepare a better survey or question. Propose a research that is thoughtful, and customized to your industry/company/situation.
(1) http://en.wikipedia.org/wiki/Net_Promoter
(2) http://hbr.org/2003/12/the-one-number-you-need-to-grow/ar/1
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