In the world of product metrics, it’s important to measure outcomes, not just outputs. When we talk about users, outcomes refer to changes in behavior. However many companies still rely on Net Promoter Score (NPS) as the primary metric to measure customer satisfaction.
NPS was introduced in a 2003 Harvard Business Review article “The One Number You Need to Grow.”
The Bain & Co. consultant who wrote the article called NPS the “simplest, most intuitive and best predictor of customer behavior” and a “useful predictor of growth.”
The metric has since become a ubiquitous tool for measuring customer satisfaction, with many companies using it as a target for executive compensation. However, the metric has been criticized for being proprietary, problematic, and often misunderstood.
According to a 2019 Wall Street Journal article, NPS is often misused by companies as a target for executive compensation. The Bain & Co. consultant who wrote the original article even admitted that he had „no idea how people would mess with the score to bend it, to make it serve their selfish objectives.”
Additionally, research on NPS has produced contradictory results. One study found that „satisfaction” and „liking” were better predictors of recommendations than „likelihood to recommend.” MeasuringU compiled research on NPS and found that while the metric often correlates with satisfaction, it is not always a good predictor of future growth.
Therefore, it’s important for companies to learn more about NPS and never use it as the only metric to measure customer satisfaction. While NPS can be useful in understanding customer behavior, it is not a panacea for all product metrics. Companies should use multiple metrics to gain a more holistic understanding of their customers and make data-driven decisions.
In conclusion, NPS has played an important role in bringing customer satisfaction to the forefront of business discussions. However, companies should not rely on it as the sole metric to measure success. By understanding the limitations of NPS and using a combination of metrics, companies can gain a more nuanced understanding of their customers and improve their products and services accordingly.