You are probably already familiar with the Net Promoter Score (NPS), a metric used to gauge the health of the customer relationship. Although it is widely used by companies, most people don’t know that it actually has three serious problems. First, the “research” behind the NPS claims is flawed. Second, the calculation of the metric (a difference score) results in an ambiguous score that is difficult to interpret. Third, the NPS is insufficient in measuring the multidimensional nature of customer loyalty.
In 2003, the Net Promoter Score (NPS) was formally introduced by Fred Reichheld, and, today, it is used by many of today’s top businesses to monitor and manage customer relationships. Fred Reichheld and his co-developers of the NPS say that a single survey question, “How likely are you to recommend Company Name to a friend or colleague?”, is the only loyalty metric companies need to grow their company.
More of the Customer Think post from Bob Hayes