In 2003, Fred Reichheld and Bain & Company coined Net Promoter Score (NPS) as the ultimate metric to predict growth by surveying whether a customer is willing to recommend your company’s product or service to others.
How it works: customers respond based on a scale from 0-10. The so-called Detractors (the percentage that score between 0-6) are subtracted from Promoters (percentage that score either 9 or 10). The Passives that scored between 7-8 are dismissed. The concept of NPS took the business world by storm. Companies worldwide were quick to adopt the framework and to use it as a metric to determine customer loyalty, customer satisfaction, and future growth.
Since its quick adoption and deployment, several academic and scientific studies were conducted to verify the validity of NPS and whether it really does predict future growth. Those that have replicated Bain & Company’s study (e.g., Keiningham, 2007; Kristensen, 2013) have discounted their claims, as their results were not comparable and at times completely contradictory. NPS is just one example of a concept that has been widely praised by thought leaders and practitioners, adopted and come to the forefront of businesses without the academic rigor to ground and validate it. The implication that’s raised is entrepreneurs should use NPS as a tool to test and understand their customer base while understanding its limitations, in addition to not depending on it as their only connection to their market.