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Posted by Christine Overby on November 20, 2006
Hi – It’s Christine Overby here, and I’m currently working on research about Net Promoter. I got the idea after participating in a Forrester leadership board session where everyone in the room seemed to be using Net Promoter. One client asked a great question: “Is Net Promoter the only real metric that matters?”
My first reaction was: No!
Don’t get me wrong. Net Promoter is a great tool. It’s straightforward, easy-to-implement, and Fred Reichheld and team have oodles of data showing the correlation between a firm’s Net Promoter Score (NPS) and its growth. But I wonder: If we focus on NPS exclusively, do we miss the nuances and other indicators of growth and profitability?
For example, what if Best Buy’s “demon” customers were the lionshare of its promoters? If this were true, then a singular focus on Net Promoter might drive growth, but profits would go down the tube.
Also, isn’t a promoter with great influence (a “connector” in Malcolm Gladwell’s world) more valuable than one who, for whatever reason, isn’t always taken so seriously?
A final food for thought: if your NPS is nearly identical to that of your direct competitor’s, then are you truly on par? My colleague Chloe Stromberg just pointed out that Facebook and MySpace have Net Promoter Scores of 37% and 36%, respectively, with teens who are active “social shoppers”. Facebook has a higher percent of passive customers – 26% compared to MySpace’s 16%; whereas MySpace has a higher percentage of both detractors and promoters. This additional color seems critical when taking action.
It strikes me that in order for companies to unlock growth and profits, marketers must look at NPS alongside other metrics like growth by customer segment and lifetime value.
We’ve only just begun this research, so I’d be curious to get your thoughts. Is Net Promoter the only real metric that matters? Is it, to borrow Fred Reichheld’s phrase, “The Ultimate Question”? What else, if anything, must marketers measure to drive strong financial performance?