NPS (Net Promoter Score) is a customer satisfaction metric based on a single question: How likely would you be to recommend this company to a friend or colleague? Initially popularized in a 2003 Harvard Business Review research article, NPS has become both widely used and controversial since then. A Journal of Marketing 2007 study tried to replicate the 2003 research, but found “no correlation between NPS score and revenue” and stated that, therefore, there was “no correlation between NPS score and capacity for growth.”
The Wall Street Journal reports that Forrester Research principal analyst for customer experience Maxie Schmidt-Subramanian stated that, “If I have to hear one more time that NPS is the worst metric or the best metric ever, I might have to quit my job.” NPS is, in fact, “so ubiquitous” that WSJ reported that, “it is now part of many companies’ security filings.”
In a 2018 article for Applied Stochastic Models in Business and Industry, however, Nicholas Fisher and Raymond Kordupleski wrote that NPS “is unsatisfactory for business decision-making because it does not tell you why they are loyal or disloyal.”
Instead of dropping NPS as a metric, many companies “are trying to use NPS as part of broader programs to understand customers and manage their experiences.” At Thimble, which offers on-demand insurance for freelancers and small gig-economy businesses, senior vice president of marketing Rikin Diwan noted that, “the survey is set up so that customers who make recurring purchases throughout the year don’t get re-asked after the first purchase.” Its NPS score is 80 percent, Diwan revealed.
Thimble also discovered, via unhappy NPS respondents, that the company needed to create a product it hitherto hadn’t offered. Thimble also “undertook a more complex survey for the first time, sending more detailed questions to a range of customers.”
Thimble’s 80 percent NPS score is not common, with Retently and ClearlyRated both reporting that the insurance industry “at large usually fares significantly worse,” averaging an NPS of 28 percent and 46 percent, respectively. Veeam Software, which offers cloud data backup and recovery services, “leans heavily on customer feedback channels that provide insights but don’t necessarily lend themselves to numerical analysis,” such as focus groups and calling new customers.
“The feedback goes directly into the product management team,” explained chief marketing officer Jim Kruger. NPS, however, gives Kruger’s team “a way of quantifying the impact of all that qualitative feedback,” and the company asks customers in its annual NPS survey not just “how likely they are to recommend its product but also the chance they will renew and their satisfaction with the overall product, specific features, sales, customer support and more.”