Be skeptical of very high net promoter scores (NPS)
June 10, 2024
Net promoter scores (NPS) are a great way to see if a customer is genuinely delighted by a good or service. The NPS score was introduced in 2003 as a way to measure customer loyalty. NPS surveys are easy to perform, as they are just a single question, “How likely is it that you would recommend [this good/service/company] to friends and colleagues?” Respondents score the product or service from 0-10 where “10” is extremely likely to recommend and “0” is extremely unlikely to recommend.
Customers that provide scores of “9” or “10” are promoters. They are likely to stay with that service or product, and not be lured away by a sale or a cute commercial. Those who give a score of 7-8 are neutral. They might well return, but could be pried away by a competitor. Customers who give a score of 0-6 are not loyal, and need merely a nudge to move to a competitor.
The NPS is the sum of promoters minus detractors; the neutral 7s and 8s don’t count. NPS scores can range from -100 (all customers offered scores between 0-6) to +100 (all customers offered scores of 9 or 10). The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters, and then multiplying by 100.
NPS demonstrates the genuine difference between excellent customer service and mediocre customer service, but it’s a punishing score. We’re accustomed to a world where an 80 or a 90 is a good score - but an NPS score of 70 is world class, 50 is pretty good, and in many industries achieving an NPS score of 30 isn’t bad. Some businesses will have a negative net promoter score.
NPS scores can be manipulated. Some companies might simply not subtract the detractors, awarding themselves what should be called a “gross promoter score.” But more often, companies looking to overstate customer experience will survey selectively. For instance, they might push a survey to only those who they know are delighted. Those who are not surveyed can’t be counted as detractors.
I see a lot of vendors selling to employers that claim net promoter scores of 90 or better. I saw a claim of an NPS of 98 just the other day. If they had surveyed 1000 customers, and 990 gave them a “10” and 10 gave then a “6”, that would be an NPS of 98 (99%-1%)*100. There are few organizations that will have 99% of their customers giving them a recommendation rating of “9” or “10.”
Implications for employers:
- Member experience is hugely important, and vendors that delight members are likely to get higher rates of engagement and delivery value.
- Treat claims of exceptionally high NPS scores with some degree of skepticism. I recommend scrutinizing business case statistics especially carefully for vendors that claim exceptionally high NPS scores.
- Employers can infer validity by inquiring how many surveys were gathered out of how many total members received services and whether specific populations were not surveyed.
- Check references and customer retention rates. Companies with very high NPS scores should rarely lose contracts and should be able to offer stellar references.
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