Is NPS a true measure of customer sentiment?
To some it’s practical and compelling, to others reductive and simplistic, but is NPS a true gauge of customer sentiment or a symptom of marketers’ obsession with numbers?
Insight into how consumers feel about your brand is marketing gold dust. Gaining the nuanced reasoning behind whether an experience satisfied or disappointed customers can mean the difference between a brand thriving or disappearing.
How realistic is it, then, that this rich insight can be reduced to a single number?
The fact is, marketers the world over are increasingly basing their business decisions and defining their company’s performance by their brand’s Net Promoter Score (NPS). According to a Wall Street Journal analysis of earnings conference call transcripts, “net promoter” or “NPS” was cited more than 150 times by 50 S&P Index 500 companies last year.
Devised in 2003 by Fred Reichheld, a partner at consultancy Bain & Company, NPS measures how likely consumers are to recommend a company to their friends or family.
Scores of nine or 10 signify loyal, enthusiastic fans or ‘promoters’; scores of seven or eight are deemed ‘passively satisfied’; while a score of six or less means the consumer is an unhappy customer or ‘detractor’. The score is then calculated by subtracting the percentage of detractors from the percentage of promoters.
NPS is a good measure to help align your organisation around the customer, says Andrew Mann, head of insight and loyalty at Marks & Spencer (M&S), who sees a strong correlation between organisations with higher NPS and positive financial performance.
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