There’s a lot to like about the Net Promoter Score that Fred Reichheld developed. Business executives are jumping on it as an easy to implement metric of customer loyalty that ties to business growth.
But academic research is finding fault with the methodology.
Tim Keiningham of IPSOS Loyalty emailed me about a paper he co-authored in the journal of Marketing. You can download it here.
According to Tim, there are two key findings from their research:
- Net Promoter is not a good predictor of growth at all
- They found very strong evidence of research bias in the research reported by Reichheld in support of Net Promoter. In particular, they were able to replicate a subset of Reichheld’s reported data for his best case scenarios and compare it to a metric he claimed was examined and found to have a 0.00 correlation to growth, the ACSI. Their findings clearly show that when using Reichheld’s own data, Net Promoter wasn’t superior to the ACSI.
I recently interviewed Claes Fornell, Director of U of Mich National Quality Research Center, and founder of the ACSI method, who said the NPS approach was “full of statistical errors.”
Is Reichheld’s claim that NPS is the “one number you need to grow” built on solid statistics, or not?