Is Net Promoter Score Worthy?
Organizations, especially global Fortune 500 companies, have been using the Net Promoter Score (NPS) system to measure customer satisfaction for a decade. Recently, I’ve encountered many smaller companies relying on their NPS, in my opinion, much too heavily. For those who are not familiar with NPS, it is measured by a single-question survey: “How likely is it that you would recommend a company to a friend or colleague?” Customers answer the question with a 0 to 10 point rating, with rankings of 9 and 10 being extremely likely.
The tool is easy to use and understand, which is why so many companies choose NPS to measure the strength of their brand. Because it’s simple to administer, companies frequently use it as a benchmark to measure brand perception over time. Unfortunately, many companies place too much weight on their NPS and the tool has some significant weaknesses.
1. It tends to overstate brand detractors.
NPS counts scores of 0 to 6 as detractors, when in fact many of those who score a company in the mid-range may well just be neutral. One study by ForeSee found that NPS overstates detractors by 299% on average. That overstatement can cause you to waste time and marketing dollars trying to win over perceived detractors who may in fact actually have no opinion on the brand.
2. It’s only a single metric.
While your NPS can provide you with a snapshot of customer satisfaction, you need more in-depth market research to effectively measure your company’s relationship with your target customers. More information is essential for the development of a strong strategy, for example, how does your brand compare to your competitor’s? Even the relatively new Word of Mouth Index—which adds the question how likely are you to discourage others from doing business with this company?—does not provide enough context and detail to drive decision making.
3. It’s not an accurate predictor of growth.
Though many companies view a high NPS as an indicator that their brand is strong and growing, the score does not accurately predict growth. You need more information to determine where your brand is positioned in the market, what size and value the potential market is, how the other marketing elements such as promotion and distribution are effecting the realization of that potential, and so on.
4. It does not tell you what’s driving the score.
Without follow-on questions that help you uncover the reasons why customers choose the ranking they do, you cannot understand what’s causing their negative or positive feelings towards your brand. And without that information, you can’t develop an accurately targeted and effective marketing strategy and may be led to false conclusions about your brand.
Because of these shortcomings, though NPS can be a helpful tool as part of a more in-depth marketing strategy, it’s only one of many key performance indicators you should evaluate when looking at your brand. You’ll need more robust and comprehensive data in order to make good, informed business decisions.