Is Net Promoter Score flawed?
Jeff Berry, Editor-in-Chief of COLLOQUY and Senior Director of Research and Development at LoyaltyOne
Through a special arrangement, what follows is a summary of a special report from COLLOQUY, provider of loyalty-marketing publishing, education and research since 1990.
For more than a decade, the yardstick for measuring business success has been Net Promoter Score (NPS), a tool created to gauge customer satisfaction with a single question: “How likely is it that you would recommend our company/products/services to a friend or colleague?”
Answering on a scale from zero to 10, those giving a score of nine or 10 classified as “promoters” of the company, product or service. Seven or eight scorers are considered “passive”; their responses are essentially thrown out in the final calculation. Zero through six are rated “detractors.” Subtracting the detractors from the promoters yields your Net Promoter Score. Any score above zero is generally considered positive and anything above 50 is excellent.
Yet NPS has also been the subject of criticism and controversy from academics, market researchers and business analysts who question whether it actually moves the needle on consumer behavior and corporate profitability. As with most things in life, Net Promoter Score is probably neither as exalted as proponents claim nor as flawed as critics do.
Strengths of NPS are seen as its simplicity (ease of use/understand), familiarity, benchmarking relativity (many brands use it) and adaptability across industries. One weakness is that NPS is a rear-facing metric: consumers’ attitudes are generally informed by their most recent experience. The response scale can also be confusing or culturally biased and the question has an inherent positive bias.
One inherent flaw is its say-do gap. Our COLLOQUY research found that only 13 percent of customers actually go on to make a recommendation after answering that they would. B2B research also finds only five percent of companies follow up with consumers who were asked the NPS question and ask them to make that recommendation.
In order to refine NPS to be a better predictor of consumer behavior, companies must ask pointed follow-ups: “When will you make this recommendation? Let’s do this!”
Companies must also push to discover the “why” or “why not” of the consumer’s decision to make the recommendation. This can provide an opportunity to change consumer behavior in a way that’s meaningful, rather than just measuring it. If you want to get a real research answer, you need to get at customers’ underlying intent, motivation and belief systems in ways that are not as simple.
- Net Promoter Score: Colloquy Report Explores Much-Lauded Loyalty Tool – COLLOQUY
- Net Promoter Score and Beyond – COLLOQUY
DISCUSSION QUESTIONS: Do you see more of an upside or downside to Net Promoter Score as a measurement tool? What adjustments or extra steps need to be made to improve its effectiveness?