The uses and interpretation of the popular metric Net Promoter Score (NPS) are still being explored and debated. Intended to measure “customer experience”, the metric has exploded over the last 5 years, with companies using NPS scores to assess and improve their products and services, to make investments, and even tying it to executive compensation. According to a recent article in the Wall Street Journal (follow the link if you have a subscription), no executive has said during a public earnings call that their NPS score had declined.
NPS scores are calculated from customers’ responses to one question: “On a scale of 0-10, how likely are you to recommend the company’s product or service to a friend?” Based on the score, responders are classified as “promoters”, “passives”, or “detractors”. The results are often used to predict future customer behavior and revenue growth.
However, some studies indicate NPS doesn’t actually predict buying habits or revenue any better than other customer metrics. Some companies have also found that the results can be easy to manipulate or have a heavy cultural-bias. Even the inventor of the metric says some uses of NPS are “completely bogus”. Forbes published an article proposing the metric be “retired”, and suggesting what to replace it with.
While it’s not a single magic-metric, hundreds of companies have found ways to modify and adapt NPS as part of their overall customer analysis methodology. Some have combined it with other metrics that can be measured and audited, or have added open-ended questions after the rating question.
Don’t count out NPS just yet.