NPS (Net Promoter Score) - Science or Pseudoscience
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The document discusses the Net Promoter Score (NPS) metric for measuring customer loyalty and likelihood to recommend a company. While NPS is widely used, the document notes it has limitations and may not be a reliable or predictive measure in all industries and situations. Specifically, NPS can be volatile, obscure other important information, and may not accurately reflect future business success or growth since loyalty is only one contributing factor. The document provides tips on how to use NPS more effectively by combining it with other qualitative and quantitative customer feedback metrics.
![That Question Again
How likely is it that you would recommend
[Company X] to a friend or colleague?
0 1 2 3 4 5 6 7 8 9 10
Not at all
likely
Extremely
likelyNeutral
Detractors Passives Promoters](https://image.slidesharecdn.com/dksnpsslidesforblogpost-191006025822/85/NPS-Net-Promoter-Score-Science-or-Pseudoscience-3-320.jpg)
NPS (Net Promoter Score) - Science or Pseudoscience
- 1. Net Promoter Score®: Science or Pseudoscience? Daniel Kinal - @dktpm Product Anonymous – Sep 2019
- 2. How Loyalty Leads to Business Success Deliver Great Products/Experiences ↑ Trial and adoption ↓ Customer Acq’n Cost ↑ Customer Referral ↑ Customer Loyalty More customers ↑ Customer Retention ↑ Repeat Purchases ↑ Cust. Lifetime Value ↓ Price Elasticity ↑ Prices & GP Make more $ Spend less $
- 3. That Question Again How likely is it that you would recommend [Company X] to a friend or colleague? 0 1 2 3 4 5 6 7 8 9 10 Not at all likely Extremely likelyNeutral Detractors Passives Promoters
- 4. And some other reasons it’s not great science 1/2 “Simply irrelevant” in some industries* Not predictive in monopoly or near-monopoly conditions* Data analysed was historical, not future. Unconvincing replication studies† * Fred Reichheld, HBR, 2003 † See Jeff Sauro’s study, 2018
- 5. And some other reasons it’s not great science 2/2 Highly volatile measure Obscures critical information
- 6. Some compelling qualities of the NPS Cheap Fast Simple Accepted
- 7. How to make NPS as valuable as possible Measure brand or “full product experience” rather than feature or interaction Measure longitudinally and conduct trend rather than point-in-time analysis Keep it as scientific as you can (randomisation, third-party research) Compare your NPS to direct competitors Remember what you are measuring (loyalty and propensity to evangelise, not product satisfaction) Analyse qualitative feedback and NPS makeup
- 8. But... ask yourself and your stakeholders: Is loyalty a significant contributor to our product’s success? Is word of mouth important? Are friends/colleagues going to be key influencers or customers? Is repeat purchase important? Will loyalty reduce price elasticity?
- 9. Think about what NPS really means for your product It is always going to be a proxy measure. Is it even a proxy for something you care about (pdt/mkt fit)? Does the loyalty model even hold true for your products? Number of degrees of separation from what you actually care about? Net Promoter Score® Net Promoter Score® Self-assessed propensity to recommend Self-assessed propensity to recommend ‘Real’ loyalty‘Real’ loyalty Referrals Rpt purchases Price insensitivity Referrals Rpt purchases Price insensitivity Future growth (Bus. success) Future growth (Bus. success) Only partial contribution Not always applicable Unreliable measure Volatility and obscurity Numerous contributing factors
- 10. ... but collect actionable data as well Non-survey / telemetry measures Customer Satisfaction (CSAT) Phrase questions carefully How satisfied were you with X to help you achieve Y? What do you like about X and where do you think we could do better?
- 11. Some best practice tips Don’t focus on a single number Mean, median, mode, SD, % Satisfied, % Unsatisfied Align with goals to determine your ‘north star’ Treasure verbatims and analyse them Try to understand why