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.

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