Net Promoter Score: Good Tool or Too Simple?

By Sharla Sikes
The Net Promoter Score can be a handy tool for businesses to monitor and manage customer relationships.
Developed by a team headed by Fred Reichheld, the NPS bases its results on the answer to a single question asked of consumers: “How likely are you to recommend this company to a colleague?” Reichheld claims this is the only loyalty metric companies need to pay attention to in order to grow.
Adopted by companies including General Electric, Intuit, T-Mobile, Charles Schwab, and Enterprise, it’s certainly a strong enough tool.
There’s an argument, however, about NPS’ merits.
Reichheld and NPS make claims that NPS is the “best predictor of growth” and the “single most reliable indicator of a company’s ability to grow.
NPS’ claims have been disputed by scientific evidence (Hayes, 2008; Keiningham et al., 2007; Morgan et al., 2006). In fact, findings showed that the NPS was not after all the best measure of a company’s performance.
Questions such as overall satisfaction and the customer’s intent to continue to purchase are of equal weight to NPS’ main query, and yield equally important data.
“Reichheld’s claims are grossly overstated with regard to the merits of the Net Promoter Score. Despite the scientific research criticizing the NPS claims, the NPS developers still presses the claim that the NPS is the best predictor of company growth,” saysÂ Bob E. Hayes, Ph.D., President, Business Over Broadway on Industry Week.
Marketing and science go head to head as Net Promoter’s developers have avoided denying these recent findings, instead praising the simplicity of their single metric as an effective means fro companies to become more customer-centric.
Hayes’ own study evaluated survey responses from 277 customer feedback professionals in businesses of all sizes. The survey asked whether participants agreed or disagreed to two questions:
1. The Net Promoter Score (e.g., recommend intentions) is a better predictor of growth compared to other loyalty questions (e.g., satisfaction, repurchase intentions).
2. The Net Promoter Score (e.g., recommend intentions) is a better predictor of growth compared to other loyalty indices (aggregate of recommend, satisfaction, repurchase intentions).
Survey results showed that while more than 80 percent of the surveyed group responded to those two questions, but only 26 percent agreed that NPS was superior to other methods. Based on other survey data, those who agreed that NPS was the superior customer satisfaction indicator were also those with lower customer loyalty scores.
Based on Hayes’ findings, NPS scores are “not widely supported by customer feedback professionals.”Â Net Promoter Scores may be simple, but it is not a number on which a business should base its entire approach to customer relationship management.
“Yes, the NPS is a simple metric, but the issue regarding its merits is much deeper. The simplicity of the NPS does not make it the right solution; the simplicity of the NPS does not minimize the problems (e.g., research bias) of the NPS research as well as their misleading claims regarding the superiority of the NPS over other loyalty metrics. The current study showed that customer feedback professionals seem to be aware of the limits of the NPS claims. Customer Feedback Professionals need to share their concerns (along with the recent research on the NPS) with their CEOs and CMOs,” says Hayes.