4.16 Net Promoter Score
“How likely are you to recommend us to your friends and/or family?” is a simple question and metric that allows businesses to track customer satisfaction. First, answers are scored between 0 to 10. Then the Net Promoter Score (NPS) is calculated like so:
- Percentage of customers who give a score of 9 and 10 (advocates)
- Percentage of customers who give a score of 0 to 6 (detractors)
- Advocates minus detractors
Customers who give a score of 9 or 10 are considered strong supporters of the business who will sing the praises of the brand to family and friends. They are also unlikely to defect to a competitor.
Customers who give a score of 7 or 8 are ignored in this calculation because they are considered passive supporters who may switch ‘allegiances’ to a competitor if a better opportunity presents itself.
Customers who give a score of 0 to 6 are people whom businesses should be worried about because of their strong dissatisfaction with the brand. These are people who have high rates of churn. Their unhappiness with the brand will have a negative impact on a company’s reputation.
While the NPS gives businesses a rough idea about consumer advocacy, the metric has its disadvantages:
The NPS lacks context – Why did the brand score poorly with some customers while winning a thumbs up from others? Delving deeper into this question allows the company to identify problem areas and take specific action.
Sample sizes might be small – The NPS is calculated from a single question that is part of a broader survey. However, surveys can have low response rates due to shifting public attitudes towards surveys , privacy concerns, and technological advancement.3 As we have seen earlier in the chapter, small sample sizes can shake the credibility of a survey’s findings.
The NPS oversimplifies human behavior – NPS detractors say the metric does not consider the difference between what people say they will do, and what they actually do.4 In the case of the NPS, a key question is, “what percentage of people actually recommend the brand to a friend or family member?” Moreover, the NPS does not take into account the complex lineup of products and services offered by a brand. A customer may like one product but dislike another.
3 Link, M. and Scagnelli, J. (July 2016). ‘Surveys in a big data world’. Nielsen journal of measurement Vol.1 Issue 1.
4 Stahlkopf, C. (2019, October). ‘Where Net Promoter Score goes wrong’. Harvard Business Review. https://hbr.org/2019/10/where-net-promoter-score-goes-wrong