Is the Net Promoter Score as valid today as when it was introduced about ten years ago?
NPS was introduced by Fred Reichheld in 2003 in his HBR article “One Number You Need to Grow”. It has been derived based on an analysis of survey samples and growth figures in a data set used at the time. Has the concept of NPS and the high correlation between promotion by customers and company growth been re-validated since? If not, what are reasons why it should not be?
Net Promoter is even more effective and valid today than at any point in the past. The main reason being that we now have actual data from thousands of companies who has leverages NPS over the past decade in some form. When first introduced there was certainly a lot of research that had already been done to show the correlation to customer behavior based on their score, but it’s always better to see it validated in the “real world” to some degree.
Aside from the market validation and some academic studies I’ve seen either around NPS or customer referral behavior, we have a lot of other data and best practices to leverage as well. How often to measure NPS at the relationship level, how to effective engage Promoters to drive referrals, how to best recover detractors, organization wide visibility, etc.
But most important of all is the evolution of the tools surrounding NPS. The biggest problem since Net Promoter was introduced as a score and eventually a “System” was the lack of proper tooling. You could:
- Hire a consultant, or firm of consultants to help you implement an end-to-end NPS process
- Pay an enterprise software company (way too much) that had some basic NPS functionality as part of their other services
- Use basic services like SurveyMonkey who can help you measure your score, but not much else (very limited value). People often mess this up by adding other questions or adding NPS to an existing survey with paltry response rates, not analyzing the data, and most importantly, not “closing the loop” with individual customers 1–1.
Net Promoter is more popular than ever as a customer metric because it has a very strong correlation to customer behavior post survey, when used right it’s a great experience for the customer, and it’s easy to understand for an entire organization.
We set out to solve the tooling/platform problem at Promoter.io because we want to see every business driving double-digit growth from referrals out of their existing customer base, and getting the most value possible out of this process.
Transactional NPS (for measuring sentiment after a specific event) and Employee NPS are also gaining traction, so the use cases are starting to spread. Employee NPS is particularly interesting, as a world-class customer experience starts with highly engaged and loyal employees.
