Wednesday, September 11, 2013

Net Promoter Scores - Do they work ?


Net Promoter Score (NPS) is as popular as engagement surveys.   There are several people who vouch for the benefits of  NPS. This is such a simple system that when I heard about NPS for the first time, I felt, this cannot be so simple !  There might be something I am missing.  The reality was, it is a simple system.   

The Ultimate Question 2.0 covers a great deal about the subject with tons of benefit. 

Interestingly we have few naysayers doubting the benefits of NPS as well.  Check this presentation out, where the authors seem to have data to prove the benefits of NPS wrong.

Another research paper here  has finding which says  “Contrary to Reichheld’s assertions, the results indicate that recommend intention alone will not suffice as a single predictor of customers’ future loyalty behavior. Use of a multiple indicator instead of a single predictor model performs better in predicting customer recommendations and retention.”

I hear that most successful companies like Apple, LEGO, Facebook, eBay, etc are using NPS.  I am sure there would be arguments – counter arguments on both sides for NPS. 

I am more inclined to believe the naysayers. We live in a complex world, and there could be multiple things impacting the loyalty, customer behavior, satisfaction etc.  It is not correct  to see a liner “Cause and effect” between the NPS score and the revenue generation(other benefits). This is like the Peltzman effect where “wearing a seatbelt induces people to drive less safely”  causing accidents, which goes totally against the linear “cause and effect” thinking.

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